2007 Housing Market: Fourth Best Year Ever

Sellers can relax.

Mortgage applicants can get their papers in order.

The upcoming year should be better than previously thought for the housin gmarket.

Such a forecost come on the heels of news that an index measuring pending home sales dropped 10.1 percent in 2006 compared to 2005, based on preliminary data released today by the National Association of Realtors.

The Pending Home Sales Index, based on contracts signed in 2006, reached 111.8 in 2006 compared with 124.4 in 2005. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

The index was 112.4 in December 2006, down 4.4 percent compared to the same month in 2005 and up 4.9 percent compared to November 2006. The month-to-month gain was the largest since March 2004 when the index rose 6.9 percent, the Realtor group reported.

“A steady narrowing from year-ago readings has been observed since last July when the level of unsold housing inventory peaked at an all-time high,” according to the report.

The Realtor group demonstrated that the level of monthly sales-contract activity from 2001-04 parallels the level of closed existing-home sales in the following two months. Looking forward, it sees a bevy of home purchase loan activity.

David Lereah, chief economist for the association, said in a statement:

“I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth-best year on record.”

The fact that mortgage interest rates remain steady can only help to boost sales around the country.