Pending homes sales rose in December

Although the sector is expected to take a least two more years to improve, low mortgage rates and prices are providing opportunities for potential homebuyers. 

“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” said Lawrence Yun, NAR chief economist. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.”

The number of homes getting a foreclosure filing are expected to increase about 20 percent this year after hitting 1 million last year, while prices are expected to drop 5 percent, bottoming out in the spring, according to RealtyTrac Inc., an Irvine, California-based data seller.

The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from the prior year, the biggest 12-month decrease in a year, a report showed earlier this week.

“The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year,” Yun said. 

The average rate on a 30-year fixed mortgage was 4.74 percent last week, up slightly from the low of 4.17 percent in early November, the lowest level since 1972, Freddie Mac said. 

The Federal Reserve called the housing market “depressed” after its Wednesday meeting, with the central bank deciding to move forward with its $600 billion stimulus program.