Reno Real Estate Logic

By Lawrence Yun, Chief Economist, NAR Research

Ah, the dog days of summer. Many are taking advantage of their last chance this season to sit on the beach, hike in the mountains or laze by the pool before the kids go back to school and everybody has to go back to work. Well, while a lot of us have been on vacation, the housing market has been relatively busy compared to earlier this year and even last year at this time. Indeed, recent figures on home sales – both pending and closed indicate that housing market recovery prospects have improved considerably. Pending home sales (contract signings) in June released earlier this month rose again for a fifth consecutive month. We’ve also seen downward trends in housing inventory and distressed property home sales. Both of these developments suggest that the market is moving back towards more normal conditions. Let’s take a look “behind the numbers.”

NAR’s Pending Home Sales Index reached 94.6 in June, its highest mark in two years and a vast improvement from the cyclical low of 80.4 in January of this year. If buyer contracts persist at this level, the corresponding home sale closings would be about 5.2 to 5.5 million at an annualized rate. For comparison, last year existing home sales totaled 4.9 million. We’re on our way to that: in June, existing-home sales increased for a third consecutive month, posting 4.89 million seasonally adjusted annualized units.

The rising sales have eaten into the bloated inventory. In June the number of existing homes available for sale declined. A year ago (June 2008) inventory stood at 4.5 million units; this June there were 3.8 million homes on the market – a 9.4 months’ supply at June’s sales pace. If pending sales continue on their current track – and if all pending sales become closed transactions – that will bring housing inventory down to under an 8-months’ supply before year’s end. What a sharp improvement from the double-digit months’ supply last year.