Pending sales for homes headed up

Realtors are optimistic, but mortgage brokers remain wary

By Tom Bayles


The National Association of Realtors reported Tuesday that the number of homes under contract for sale in April posted the largest monthly jump in nearly eight years.

The spike in "pendings" was touted as a sign that sales are coming to life after a long and painful slump since the housing boom ended three years ago.
"The pronounced increase in April does indicate that actual existing home sales are poised to rise in the coming month or two," wrote Joshua Shapiro, chief U.S. economist with MFR Inc.

But local mortgage brokers and a noted Florida economist say that the housing industry is spewing hyperbole.
Tom Flood of Sarasota's Covenant Mortgage said 90 percent of his closings today involve short sales, deals where a lender agrees to accept less than what is owed on a property, or foreclosures -- and about 20 percent of them never consummate.

This is the eye of the storm, and it is not good news," he said. "You have to be careful with pending sales going through the roof.
In a normal market, Flood said, less than 5 percent of pendings fail to close. Not today.
"We jokingly call short sales long sales," he said. "You just cross your fingers."
The National Association of Realtors's seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from 84.6 in March. Typically the index is a barometer for future existing home sales.

The index was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January.
The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February, Lawrence Yun, the Realtors' chief economist, said in a statement.

Even Yun, however, tempered his remarks.

He, too, cautioned that the pending sales data is more volatile than in the past because many sellers need banks to agree to a short sale, which is a difficult and time-consuming process that can wind up falling apart before the deal closes.
Matt Augustyniak, owner of Manatee County's Horizon Realty, which has a mortgage wing, said rules put into place by the Mid-Florida Multiple Listing Service water down the optimism that a spike in pendings would otherwise bring.

Pending home sales in Manatee, Sarasota and Charlotte counties combined rose 18.38 percent in April, according to an analysis of Trendgraphix data by Sarasota-based Michael Saunders & Co., which had its largest number of pendings in April since March of 2004.

Sean Snaith, a University of Central Florida economist, said the national rise in pendings is evidence that the market is at or near bottom. But he cautioned that there must be several quarters of positive news on many economic fronts before he would say things are normal.

"We've seen foreclosure sales perk up, but now we need to see some stabilization in prices before we start talking about the housing market being back in balance," he said. "I want to see the signs that the patient is completely healthy, not just that his blood pressure is down."