After a series of worse-than-expected data last month, the housing market appears to be back on track.

The Pending Home Sales Index posted 101.4 in March, a four percent gain from the month prior and the index’s highest reading since April 2010 — the last month of that year’s federal home buyer tax credit.

A “pending home” is a home under contract to sell, but not yet closed.  The Pending Home Sales Index is tracked and published by the National Association of REALTORS® monthly.

The March report marks the index’s first 100-plus reading in nearly two years.

To Lake Geneva home buyers and sellers throughout Wisconsin, this is statistically significant because the Pending Home Sales Index is normalized to 100, a value corresponding to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market.

The March 2012 Pending Home Sales Index, therefore, puts current market activity on par with market activity from 2001.

You wouldn’t know it from reading this week’s papers, though.  There have been stories about how the Case-Shiller Index put home values at new loans; and how the Existing Home Sales figures unexpectedly dropped off; and how the New Home Sales report was a laggard.

But this is why the Pending Home Sales Index can be so important.

What makes the Pending Home Sales Index different from those other data points is that the Pending Home Sales Index is a “forward-looking” housing market indicator.

Unlike most data which aims to tell us how the housing market performed at some point in the past, the Pending Home Sales Index attempts to tell us how the housing market will perform at some point in the future. 

80% of homes under contract close within 2 months.  Many more close within months 3-4.  Therefore, on the strength of the March Pending Home Sales Index, we should expect a strong April and May nationwide

If you’re shopping for homes right now, consider taking advantage while the market remains somewhat soft.  Lake Geneva mortgage rates are low and home prices are, too.  It can make for a good home-buying conditions.

In March, for the second straight month, home resales slipped nationwide.

According to the National Association of REALTORS®, March 2012 Existing Home Sales fell to 4.48 million units on a seasonally-adjusted annualized basis — a 3 percent drop from February.

An “existing home” is a home that’s been previously occupied or owned.

The weaker-than-expected Existing Home Sales data is the third such housing report this month to suggest a lull in the spring housing market.  Earlier this week, homebuilder confidence slipped for the first time in three months and March Single-Family Housing Starts fell, too.

The news wasn’t entirely bad for home resales, however.  Although total home units sold decreased, so did the number of homes available for sale.  There were just 2.37 million homes for sale nationwide in March, a 2 percent drop from the month prior.

At the current pace of sales, therefore, the entire nation’s home resale stock would “sell out” in 6.3 months.  This is the second-fastest pace since the housing market’s April 2007 peak.  

A 6-month supply is widely believed to represent a market in balance between buyers and sellers.

The March Existing Home Sales data shows that — despite record-low mortgage rates nationwide – buyer activity in Lake Geneva, Wisconsin is slowing, and seller activity may be slowing, too.

So long as the two forces remain in balance, home prices should do the same.  This is the law of Supply and Demand at work. 

However, if home sales continue to slide and home inventory builds, buyers may find themselves with an edge in negotiations. 

If you’re planning to buy a home in 2012, the long-term housing trend is still toward recovery.  This season may be a good time to look at your options.  Talk to your Lake Geneva real estate agent to see what’s available. Low mortgage rates may persist, but low home prices may not.

The market for home resales stays strong.

Despite sparse home inventory, the National Association of REALTORS® reports that 4.59 million existing homes were sold in February on a seasonally-adjusted, annualized basis.  An “existing home” is a home that cannot be classified as new construction.

Last month’s sales data represents a 9 percent improvement from the year prior.

There are now just 2.43 million homes for sale nationwide — a 19% reduction versus a year ago.  The complete home inventory would “sell out” in 6.4 months at the current sales pace.

Some analysts believe that a 6-month home supply indicates a housing market in balance.

The real estate trade group’s report contained other noteworthy statistics, too :

1. 32 percent of home sales were made to first-time buyers
2. 33 percent of home sales were made with cash (i.e. no mortgage)
3. 34 percent of home sales were of foreclosed homes or homes in short sale

In addition, nearly one-third of all home sales “failed” last month, the result of homes not appraising at the purchase price; or, the buyer’s inability to secure mortgage financing; or, insurmountable home inspection issues.

Even accounting for last month’s high contract failure rate,though,  the Existing Home Sales report still posted its second-highest reading since May 2010. For today’s Williams Bay home buyer, the data may be a “buy signal”.

As compared to last fall, home supplies are down and home sales are up.  Basic economics tell us that home prices should start to rise shortly — if they haven’t already.  After all, the Existing Home Sales data is 30 days old, reporting on February.  It’s nearly April today.

The good news is that homes remain affordable.  With FHA and conforming Lake Geneva mortgage rates in the low-4 percent range, home affordability is at its highest in history.  Home prices may rise this spring, but at least your mortgage payment should remain low.

The housing market appears headed for a strong spring season.

After a brief setback in December, the Pending Home Sales Index resumed its climb in January, posting a 2 percent gain over the month prior.

The data puts pressure on Lake Geneva home buyers.  This is because a “pending home” is a home that’s under contract to sell, but has not yet sold. It’s tracked by the National Association of REALTORS® and, among all housing statistics, it’s the only one that’s “forward-looking”.

The Pending Home Sales Index is important to home buyers throughout Wisconsin because 80% of homes under contract to sell close within 60 days of contract.  In this way, the Pending Home Sales Index forecasts the housing market 1-2 months into the future.

This is very different from how NAR’s Existing Home Sales report works; or, how the Census Bureau’s New Home Sales report works.  These two metrics tell us what’s already happened in housing.

By contrast, the Pending Home Sales Index tells us what’s coming next.

January’s Pending Home Sales Index reading lifts the monthly metric to its highest level since April 2010 — the month during which the 2010 federal home buyer tax credit expired — foreshadowing a strong housing market through March and April 2012, at least.

This should not be news, of course.  The nation’s home builders have said “foot traffic” is rising and home supplies are scarce nationwide.  The only wild-card for housing is the high contract cancellation rate.

As compared to last January when just 9 percent of home purchase contracts “failed”, this January saw 33 percent of contracts fail.  High failure rates undermine the Pending Home Sales Index’s viability as a forward-looking housing market indicator.

Despite contract failures, though, the combination of low mortgage rates and low home prices is enticing to today’s home buyers.  Expect home sales to climb in the coming weeks which will lead to a strong spring season for housing.

The housing market recovery stalled last month.  At least temporarily.

According to the National Association of REALTORS®, Existing Home Sales slipped 1 percent in April from the month prior, falling to 5.05 million units on a seasonally-adjusted, annualized basis.  The reading is exactly in-line with report’s 6-month average which also reads 5.05 million units.

The data may appear “average”, but there’s another angle to consider.

In April, as compared to March, the supply of existing homes for sales spiked.  At the current pace of home sales, it would now take 9.2 months to exhaust today’s complete home inventory.  This is almost one full month worse than March.  It’s the worst home supply reading of the year.

There are also more homes “on the market” today than at any time since September 2010.

Other noteworthy statistics in the April Existing Home Sales report include:

• 31 percent of all homes sold in April were purchased with cash
• First-time home buyers bought 36 percent of all homes in April
• Distressed properties typically sold at a 20 percent discount

This “discount”, it should be noted, is a major reason why distressed properties accounted for 37 percent of the home resales in April.  Lake Geneva home buyers are finding bargains when they’re willing to consider homes in various stages of foreclosure and short sale.

Overall, the April Existing Home Sales report represents opportunity for home buyers in and around Lake Geneva, Wisconsin.  Home sales are stagnant, supplies are rising and there’s no shortage of properties from which to choose.  Furthermore, mortgage rates remain low.

If you’re considering a home purchase this fall, home supply may not be as ample, and financing conditions may not be as favorable, post-Labor Day.  Talk to your real estate agent about what’s possible today. You may want to move up your time frame.