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Home Sales on the Rise

Pending home sales tracks the number of signed contracts. A signed contract is the beginning of the final steps of buying you new home. It generally takes a month or two to get to closing and ownership. The National Association of Realtors, or NAR, existing home sales tracks the number of actual closing.

Americans signing contracts last month to buy homes increased 6.7%, the largest increase in seven years. That is really good news for the economy and you too if you have bought a home recently. Let me explain. As the economy improves and people spend more money, the US bond yields will rise as investors look for other more profitable places for their money. This will drive up interest rates, as is already happening.

Right now the foreclosure market and tax incentives are helping home sales. As the momentum increases, builders and sellers will start to take advantage of simple supply and demand laws. Supply decreases, demand increases and prices rise. This could take several months, even a year, or it could start tomorrow. No one knows for sure.

The previous pending home sales figures from last month was 3.2%. Analysts had predicted an increase of .4%. The actual number blew the predictions away. This could just be an influx of first time buyers taking advantage of the revised $8000 tax credit, or it could be from an improvement in consumer confidence and people not willing to take the chance and wait for further decreases in price. Again, no one knows for sure.

It’s ultimately your decision to either wait the market out and hope rates drop and prices remain low or to get in your new home before inflation comes and prices rise. One thing is for sure, the market is on it’s way back to equilibrium.

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June 2, 2009 - Posted by | bond, buy, Home, price, real estate, yield

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