Homes under contract to buy rose in July for the sixth straight month, reaffirming the widely held view that the worst of the housing market correction is behind us. The index of pending home sales rose 3.2% from the month before, according to Bloomberg.

Even Mark Zandi, the famously bearish chief economist at Moody’s Economy.com, said “The housing market is much improved.”

Indeed, buying activity is strong, and some markets could even be described as “hot,” with little inventory and many multiple bid situations. Ultimately, the question is the sustainability of this “rally” in the low end markets, and how things will shake out of the government starts to ratchet back it’s support of the housing market.

Positive data continues to emerge from the housing market, as buyers take advantage of home prices that have fallen dramatically from their peak, along with low interest rates, tax credits and a stock market that can’t seem to be kept down.

Pending Home Sales in June, which measure signed purchase contracts and are often examined as a forward looking measure of closed sales, rose 3.6% from the previous month, outpacing economists’ expectations. The index chalked up its fifth consecutive increase, according to Bloomberg.

Analysts were cautiously optimistic, citing a moderate uptick in sales against a backdrop of a weak employment outlook and very constrained consumer credit market. According to senior economist at New York-based 4Cast Inc.,

“It’s a modest recovery, however these numbers are exceeding peoples’ expectations. While there are genuine signs of recovery in housing and manufacturing, the consumer is still the big sort of worry,”

As talk of a rebound in housing continues to gain steam, it’s important to understand the distinction between “stabilization” and “recovery.” The former does not necessarily imply the latter. For more on this topic as it relates to the broader economy, check out this excellent article from Minyanville, by finance expert Satyajit Das.

Despite markedly higher interest rates and problematic new appraisal guidelines, homebuyers are still stepping back into the market.

The National Association of Realtors said yesterday that pending home sales, which measure new purchase contracts signed, rose in May for the fourth consecutive month. According to Bloomberg, the 0.1% gain from the prior month barely edged out expectations that the gauge would remain unchanged.

Bottom calling is once again en vogue, as an analyst from BMO Capital Markets in Toronto said

“We’re starting to see sales stabilizing. We’ve probably reached bottom or are close to that.”

As discussed in this month’s Cirios Trends, this incessant bottom calling is a farce. To say that “the housing market” has bottomed is a meaningless statement, since local markets often move independently of the broader trend. Anyone calling a bottom in the broad market is likely trying to sell you something, or trying to get their name in the paper.

Only careful analysis of local trends, sales patterns and inventory level can provide insight into the near term direction of home prices. Looking for this very thing for your market? Contact Cirios today!

The barrage of positive housing data continued yesterday as April Pending Home Sales — which measure contracts signed for new purchases — jumped 6.7% from a month ago. The index, which is viewed as a leading indicator for future sales, was also up 3.2% from this time last year, according to Bloomberg.

Sales continued to be the strongest in regions dominated by foreclosures, as “bargain” prices, low interest rates and first time homebuyer tax incentives encouraged buyers to step back into the market. Lawrence Yun, the National Association of Realtors’ perennially optimistic Chief Economist, said “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline.”

In other words, the guy who is supposed to know more about the state of the US housing market than anyone else in the country appears confused by the fact that real estate, in fact, is local.

As reported here at Cirios Real Estate for months, home price trends are becoming increasingly localized, as supply/demand fundamentals down to the street levels drive property values. It’s no longer sufficient to say that home prices in X city, or X county, or even X zip code have done Y. Only analysis down to the neighborhood level can give you an accurate picture of where prices are going for an individual house.

And as housing data steadily improves, it is all the more important for buyers to have price trend experts like Cirios on their side.

The National Association of Realtors, or NAR, released its Pending Home Sales Index today, which showed continued strength in broad housing market data. The report, which measures signed contracts — often viewed as a leading indicator for future sales — came in at 84.6, up from 82.0 last month and the 83.7 reading in March 2008.

Low supply, largely due to banks holding back foreclosure inventory from the market, helped drive buyers to seize on what appear to be the only deals in town.

For the past 2 months, housing market data has gotten less bad, leading many optimistic “experts” to assure the country that the worst is over, and that real estate will be back on its northward way in short order. Nowhere in the carefully-worded press releases from the NAR, however, is mention of the actual cause of dropping supply. The real estate lobby is assuring us recent market “strength” has been caused by tax credits, low interest rates and increased affordability.

And while those factors are indeed driving the demand side of the equation, the supply side of the picture is still being driven by the market for bank owned homes. As lenders are now free, after the lifting of a series of foreclosure moratoria, to release their latent supply of homes onto the market, the true strength of this data–and the alleged green shoots of a recovery–will be put to the test.

Following a pattern set with both existing home sales and new homes sales, pending home sales bounced in February, up 2.1% from the previous month. The National Association of Realtors’ released its monthly index that tracks the number of signed contracts, showing a gain to 82.1, from 80.4 in January. A reading under 100 indicates a depressed market.

It seems everyone is jumping on the home buying wagon, even the chief economist at Standard and Poors is getting bullish “We are seeing a bottom in housing sales. People are coming in as bargain hunters. This is a good time to be buying a house.”

Meanwhile, home prices keep tumbling — the S&P Chase/Shiller Home Price Index recorded its worst monthly decline on record and one Barclays analyst said she doesn’t expect home prices to bottom until next year

Typically, home sales find a bottom prior to prices. As inventory is worked off, supply becomes more constricted and the power slowly shifts away from buyers and towards sellers. In the frenzy to be the first to accurately call a bottom, bold analysts are throwing caution, and the notion that one month does not a trend make, to the wind.

But rest assured, those same analysts will be calling this pop an anomaly when the data come around in another 30 days.

Breaking a trend of rising Pending Home Sales, the index of signed purchase contracts fell in January, down 7.7% from December, according to the National Association of Realtors (or NAR). The drop was more than twice as bad as economists’ expectations — and by “expectations” we mean wild stabs in the dark.

Pending Home Sales, which measure contracts signed in a given month, are considered a leading indicator of actual sales, which typically close 1-2 months later.

Notably, a trend discussed for the past few months here at Cirios persists: Sales activity in the West continues to outperform the rest of the country. In January, signed contracts dipped 13% in the Northeast and 12% in the South, but ticked up 2.4% in the West. New England is being hit particularly hard as Manhattan reels from the meltdown on Wall Street, sending home prices in the concrete jungle off the proverbial cliff. This shouldn’t be news to avid readers of this site — we’ve been on this trend for months.

Nevertheless, despite dour economic news and sickly data, the spin doctors over at the NAR remain hard at work. Lawrence Yun, living proof that being wrong for 1000 days running qualifies you to head up the biggest real estate lobby in the country, postulated that he “[expects] similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions.”

Just like they did this month Mr. Yun? Keep on spinning, sir.

By AUSTIN NELSON

Data released by the NAR yesterday show that pending home sales increased at the national level by over 6% in December 2008. Analysts had been expecting the reading to be unchanged from the previous month. This index theoretically predicts home sale trends for the following month by looking at the number of signed contracts in the month under study.

While the data look rosy on the national level, speaking to a momentary surge in buying activity, a closer look reveals some interesting trends.

The national rise in the index was led strongly by the Midwest and South regions, which saw month over month increases of 12.8% and 13.0% respectively. The Northeast and West, on the other hand, saw modest declines in their indices.

This is especially interesting in the Northeast, which has seen a downward trend in sales volume since the middle of last year. The pressure does not seem to be easing, as prices in the region have also been falling over the last six months after holding up better than most other regions of the country. Home sales in the Northeast are lagging other regions where price declines began earlier, and have been more severe. Until prices have come down a little farther in this region, do not expect to see the bump in sales that the rest of the nation is seeing.

On the other side of the country, the West experienced an uptick in sales volume before activity began to increase in other regions. This is in line with the fact that the West saw earlier and more dramatic price declines than the rest of the nation.

As prices continue decline in the Midwest and South regions and government efforts to decrease interest rates kick in, expect to see continued increasing volume trends in those regions.

Now that the West has experienced one month of declining activity, watch this area to get an idea if the trend of increased volume will be a sustained process or a flash in the pan on the way down. For the buying to persist, prices will have to stabilize somewhat, giving prospective homebuyers confidence that the cheap homes they are buying represent a sound investment.