Housing market optimists picked up another encouraging data point Tuesday, when a new report on the residential real estate market came in stronger than expected. The National Association of Realtors’ pending home sales index for July was 12 percent above year-earlier levels, hitting its highest point since June 2007. "The increase reported for pending home sales was the sixth consecutive gain, suggesting firmer figures for existing home sales in the next month or two," economists at Goldman Sachs said in a report.
Here are five things you need to know about the July pending home sales report:
1. Lower prices, cheap mortgage rates: Even with the unemployment rate sitting at well above 9 percent, the nation’s beleaguered housing market is handing would-be buyers some compelling reasons to get off the sidelines. "The combination of low home prices and low mortgage rates—for the creditworthy—is pulling people back into the market," Ian Shepherdson, chief U.S. economist at High Frequency Economics, said in a report.
2. $8,000 tax credit: The $8,000 first-time home buyer tax credit—which the Obama administration included in its massive stimulus package—has also helped. "NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year," the trade group said in its press release. "With approximately 350,000 additional sales that would not have taken place without the credit."
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