The National Association of Realtors (NAR) latest Pending Home Sales Index indicates continued growth for the U.S. housing market. Sales saw a small gain for the month of April, although price gains were offset by slips in the southern and western regions of the country. NAR analysts say supply shortages are helping to boost the numbers and that total existing home sales are set to see a modest increase in 2013. Meanwhile, the commercial real estate market seems to be having an uneven recovery, with the multifamily sector seeing the most growth. For more on this continue reading the following article from Property Wire.
Pending home sales in the United State improved slightly in April and continue to be well above a year ago, according to the latest report from the National Association of Realtors.
Price gains in the Northeast and Midwest of the country were offset largely by declines in the West and South.
Overall the Pending Home Sales Index, a forward looking indicator based on contract signings, rose 0.3% to 106 in April from 105.7 in March, and is 10.3% above April 2012 when it was 96.1.
Home contract activity is at the highest level since the index hit 110.9 in April 2010, immediately before the deadline for the home buyer tax credit. Pending sales have been above year ago levels for the past 24 months.
Lawrence Yun, NAR chief economist, said a familiar pattern has developed. ‘The housing market continues to squeak out gains from already very positive conditions. Pending contracts so far this year easily correspond to higher closed home sales in 2013,’ he explained.
Total existing home sales are expected to rise just over 7% to about five million this year. ‘Because of inventory shortages, higher home sales will push up home values to the highest level in five years,’ Yun said.
The association is also predicting that the national median existing home price should increase close to 8% and exceed $190,000 in 2013.
The PHSI in the Northeast jumped 11.5% to 92.3 in April and is 17.7% above a year ago. In the Midwest the index rose 3.2% to 107.1 in April and is 15.1% higher than April 2012. Pending home sales in the South slipped 1.1% to an index of 119.2 in April but are 12.3% above a year ago. With pronounced inventory constraints, the index in the West fell 7.6% in April to 94.6 and is 2.6% below April 2012.
Meanwhile, in the commercial real estate sector vacancy rates have fallen modestly and rents risen moderately as financing remains a challenge for small business, according to the NAR quarterly commercial real estate forecast.
Yun said that the market is showing an uneven recovery. ‘The wheels appear to be greased for the big players, but not so much for small business. Overall, the commercial sectors are firming nicely, with multifamily continuing to show the best performance,’ he explained.
National vacancy rates over the coming year are expected to decline 0.1% in the office market, 0.5% in industrial, and 0.3% for retail. However, the average multifamily vacancy rate is forecast to rise 0.2% with that sector still showing the tightest availability and biggest rent increases.
A companion report, the Commercial Real Estate 2013 Lending Survey, shows widely varying availability of lending capital depending on property size, with a significant disadvantage for buyers of smaller properties.
Commercial sales volume of major properties valued at $2.5 million and above increased 24% in 2012 to $294 billion. The uptrend continued during the first quarter of 2013, with a $72.8 billion volume that is 35% above the first quarter of 2012. Some 16 markets in the first quarter experienced triple digit gains.
Commercial mortgage backed securities regained market share in 2012, accounting for 22% of lending for major commercial properties. A comparable source was government agencies, followed by national banks, insurance companies and regional banks.
‘Despite the improvement for major commercial properties, 52% realtors report they had a commercial transaction fail in the past year due to a lack of financing,’ Yun said. ‘In addition, 42% of respondents said clients failed to complete a refinancing. Credit for small business remains unnecessarily tight,’ he added.
Commercial members report that new and proposed US legislative and regulatory initiatives, and regulatory uncertainty for financial institutions, account for the lack of capital in commercial lending for smaller properties.
This article was republished with permission from Property Wire.