By Peter Ricci
Pending home sales rose year-over-year for the 14th consecutive month in June, according to the latest Pending Home Sales Index from the National Association of Realtors.
A forward-looking index based on contract signings, the Pending Home Sales Index (PHSI) rose 9.5 percent from June 2011, though it did decline a bit by 1.4 percent from May 2012.
Lawrence Yun, NAR chief economist, said inventory shortages were a factor in the index’s monthly slip.
“Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” Yun said, echoing his statements for last week’s existing-home sales data. “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”
And NAR’s Confidence Index does support Yun’s claims of an imbalance. While buyer traffic for the index was rated at a 60, seller traffic was just 41, showing an imbalance between housing supply and demand that has been present in the market the last couple months (a value of 50 signifies neutral market conditions).
Interestingly, that has also been the experience of Michael Parent, the president-elect of the Mainstreet Organization of Realtors and the managing broker of Coldwell Banker Residential Brokerage in St. Charles. Though Parent’s office is seeing a “significant amount of buyers,” they are running into some inventory constraints, a divergence Parent chalked up to slow-moving banks and tepid sellers.
Banks, Parent said, could definitely be more proactive with their REO properties, many of which sit vacant throughout Chicagoland’s western neighborhoods collecting dust. With some minor fixes, such as white-washing the walls and laying neutral carpeting, the properties could find buyers at the right price range, but instead, the inventory sits and creates additional demand for the few properties that are on the market. For instance, one property that Parent’s office listed had five offers after just four days on the market.
On the seller side, Parent continued, it’s ultimately up to Chicago’s real estate agents to define their individual markets. Too many sellers, he said, are bogged down by the national news cycles, many that report negative news on the economy and the housing market; as a result, they don’t feel the time is right to list their properties, even though considerable buyer excitement currently exists for homes.
“There’s lots of buyer excitement,” Parent said. “How can you not be excited with interest rates of 3.5 percent?”
Therefore, agents need to engage in what Parent called the “communication factor,” and notify their local consumers that now is a great time to list their homes. Even if it means engaging in decidedly old-school methods, such as canvassing and going door to door, Parent said agents must cut through the national news cycle and notify their clientele of the market’s true conditions.
“That’s the biggest thing that agents need to do,” he said.