Lured by low rates, deep discounts, buyers creeping back into market
WASHINGTON – An index that tracks signed contracts to purchase previously occupied homes rose in February from a record low a month earlier as U.S. buyers took advantage of deeply discounted prices and low interest rates.
Meanwhile, mortgage applications continued to rise last week, as low interest rates encouraged borrowers to refinance their home loans.
The National Association of Realtors said Wednesday said its seasonally adjusted index of pending sales for previously occupied homes rose 2.1 percent — in line with expectations — to 82.1 in February from January’s record low of 80.4.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales.
“We expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory,” Lawrence Yun, the trade group’s chief economist, said in a statement. “Under these conditions, we should see price stabilization in most markets by the end of the year.”
For now, however, refinancings rather than first-time buyers still dominate.
Read “Pending home sales rise in February” from the Associated Press, April 1 2009.