Steady jumps in pending home sales and low interest rates continue to lead housing out of the doldrums into growth mode -- and even toward price increases in some hard-hit markets as well.

Last week's 3.6 percent increase in pending sales marked the fifth consecutive month of positive news from this key leading indicator, the first time there's been a string that long since 2003.

Every region of the country saw increases in pending sales in June, according to the National Association of Realtors, which compiles the data based on signed contracts for home sales that haven't yet closed.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the string of increases in part to first time buyers getting off the sidelines and looking to qualify for federal tax credits.

Another contributing factor is the dramatic improvements in affordability of houses in many markets, sharply lower prices combined with mortgage rates in the mid to lower five percent range.

The national housing affordability index is now 37 percent better than it was just a year ago. The typical family, with a monthly household income at the national median, can now devote just 16 percent of gross income to paying principal and interest on a median priced home financed with a 20 percent downpayment.

That sort of affordability hasn't been seen for decades!

Meanwhile, there are growing reports of multiple offers on low-priced houses for sale in some major markets, along with the first signs of possible price turnarounds.

For example, in the Portland-Vancouver market, resales in June were up 25 percent from May. But more significantly: the median price of homes sold there gained 2.1 percent, according to MDA DataQuick, a research firm.

On the mortgage front, new purchase applications to buy houses rose again last week, according to the Mortgage Bankers Association. Thirty-year average fixed rates fell to 5.2 percent from 5.4 percent. Fifteen year rates averaged 4.6 percent.

Not all the economic indicators are reading positive for real estate, of course. Unemployment rates in many parts of the country remain in the double digits, consumer confidence is brittle, and gross domestic product, GDP, was down last quarter by one percent, the fourth straight quarterly drop.

But economic forecasters like the Mortgage Bankers' Orawin Velz, see a bright side on the near horizon: The latest GDP negative number is much smaller than the 6 percent plus loss in the previous quarter.

That suggests "the end is near" for the recession, she says, and that's got to be good for housing.

Written by Kenneth R. Harney
August 11, 2009