NAR has published it's June Pending Home Sales Index and it is encouraging. The Pending Home Sales Index (PHSI) is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The June numbers don't reflect activity resulting from the Housing & Economic Reform legislation recently signed. Projections are for a improvement in existing homes sales in the months ahead and stronger gains in the fourth quarter as homebuyers begin taking advantage of the First Time Homebuyer Tax Credit and FHA Modernization.

According to Lawrence Yun, NAR chief economist: " This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”

According to the report the PHSI rose 9.3% in the South and sales have remained consistently strong in areas where prices have seemingly bottomed, like Sacramento CA, Las Vegas and Ft. Myers. Yun also noted that builders are still facing higher construction costs and new home sales may not benefit as quickly as existing homes until they are able to reduce inventory and costs.
With mortgage rates remaining favorable many buyers may be sensing the bottom and recognizing that owning a home is again affordable.

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