Pending home sales rise for sixth straight month

09.02.09
By Nicholas Storie

The economy appears to be getting back on track as more Americans are paying down their credit card debt and able to handle their home loans. This new-found financial optimism seems to be translating into home sales for many of these individuals.

According to the National Association of Realtors (NAR), pending home sales have seen an increase for the last six months with the July Pending Home Sales Index sitting at 97.6 - a 3.2 percent increase over June and a 12 percent rise over July of last year.

Lawrence Yun, chief economist for the NAR, says that low home prices have helped to drive the pending home sales and says that people should have an easier time making mortgage payments in the future.

"Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970," he said. "As long as home buyers stay within their budget, mortgage payments will be very manageable."

In addition to low prices, first-time home buyers have also been able to take advantage of an $8,000 tax credit on the purchase of a house. This tax credit is slated to end this year, although there has been talk of extending the program, which Yun says will create a drop in the housing market for the first quarter of 2010.

Another driver of home sales has been mortgage rates, which Frank Nothaft, vice president and chief economist for Freddie Mac, recently said have stayed "historically low" over the last year.

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Pending home sales have risen for six straight months