Demand for Housing Will Increase in 2011

by The KCM Crew on December 13, 2010

The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:

housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.

This increase confirms a growing feeling that demand for housing has begun to increase.
Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters. Here are their projections:

 

Bottom Line

Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.