Demand is Projected to Increase in 2011

Good News for 2011!

Both The National Association of REALTORS® and Fannie Mae expect an increase in demand for homebuyers in 2011. Pending home sales jumped in October, showing a positive uptrend since bottoming in June, according to the National Association of REALTORS®.

The Pending Home Sales Index (see below), a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The PHSI 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:

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, which could take up to a year and a half to return to normal.