NAR Chief Economist: “Housing Affordability Is Hovering Near Record Highs”

The National Association of Realtors today reported August pending home sales increased 4.3%, following an increase in July. The August 2010 number is 20.1% below August 2009. The data reflects home sales contracts signed in August and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said this suggests improving sales data in the coming months, but the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence.

Yun also said a sudden rise in mortgage rates could slow the recovery. “Current low consumer price inflation has helped keep mortgage interest rates very attractive this year. However, recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates,” he said. “Higher inflation would mean higher mortgage interest rates. In the meantime, housing affordability is hovering near record highs.”