Pending home sales jump 27 percent in Reno-Sparks
RENO, Nev. ” Pending sales of existing homes in the Reno-Sparks area rose 27 percent from February to April, a sign that consumer confidence in the region may be improving, local realtors say.
The 748 new active pending sales last month were more than double the 361 reported in April 2008, the Reno-Sparks Association of Realtors said.
Pending sales typically serve as a forward-looking indicator for home sales. They involve an agreement to purchase a home where a contract has been signed but the transaction has not yet closed.
The pending home sales index nationally rose 3.2 percent in March, according to the National Association of Realtors.
Kris Layman, president of the local association, the increases seen locally and nationally could be a positive sign, not just for housing but the economy in general.
“In general terms, the upside is that consumers are starting to show some confidence, which will hopefully pour into the rest of the economy,” Layman said. “That trickle down effect brings good news to all those different products and services.”
On the down side, distressed properties continue to drive pending sales in the area, accounting for 78 percent of pending inventory in March. Distressed properties are those cases where the owners are under pressure to sell quick, in some cases selling short.
Among new listings, the percentage of distressed homes in the Reno-Sparks area rose from 59 percent to 63 percent in the same period.
The high number of distressed pending sales is good on one hand because the market needs to clear off those properties first in order for a rebound to occur, Layman said.
On the other hand, distressed properties such as short sales also have a lower rate of success in turning into an actual sale, although the ratio has improved recently, Layman said.
Lower-priced homes continue to dominate sales, with distressed properties accounting for 72 percent of existing homes that sold in the area in March. Homes priced at $250,000 and lower were at a 5.6 month supply in March. In comparison, inventory for homes priced from $351,000 to $450,000 were at 19.9 months while homes priced between $451,000 to $1 million was at 28.6 months.
The accelerated sales in the lower price range can lead to downward pressure on median price, Layman said.
“For every one sale below the median, it takes one sale above it to maintain that price,” Layman said. “So this high activity in the lower price ranges has a strong toll and pulls on that median quickly.”
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