Home sales in U.S. show signs of growth, but concerns remain

by George Bao

LOS ANGELES, May 8 (Xinhua) -- Home sales in the United States have begun
to pick up, particularly on the western coast, but it remains unclear if the
market has bottomed out.

According to media reports, banks in southern California are seeing more
people applying for mortgages.

Six months ago, a bank had to purchase a house in Sierra Madre, southern
California, from a man who was unable to pay his mortgage. The house was bought
by the man for 1.19 million dollars, but he had to surrender it to the bank for
910,000 dollars. The bank put the house on sale for 1.17 million dollars, but
there were no takers.

In April, the 4,200 square feet (390 square meters) house on a lot of 9,500
square feet (882.6 square meters) was listed for 799,000 dollars. Within a few
days, four buyers showed interest. It was eventually sold to a Chinese American
for 840,000 dollars.

To offer a price higher than listed has been rare in the U.S. in the past
year due to the financial crisis. In southern California, some short sale and
foreclosed homes have also been selling well since March.

At Hacienda Heights, southern California, a four-bedroom 2,000 square feet
(186 square meter) house, occupying a lot of 10,000 square feet (929 square
meters), was recently sold for 479,000 dollars, 20,000 dollars less than the
listed price.

According to official figures released earlier this week, the U.S. Pending
Home Sales Index increased 3.2 percent to 84.6 in March from 82.0 in February,
1.1 percent higher than March 2008 when it was 83.7. The index is a
forward-looking indicator based on contracts signed.

The chief economist of the National Association of Realtors, Lawrence Yun,
said it would take another few months for the market to gain full momentum.

"This increase could be an indicator of first-time buyers responding to
very favorable affordable conditions and an 8,000-dollar tax credit. The credit
has increased buying power even more in areas where special programs allow
buyers to use it as a down payment," Yun said.

President Barack Obama introduced the credit in mid-February for first-time
buyers to boost the housing market.

"We need several months of sustained growth to demonstrate a recovery in
the housing market, which is necessary for the overall economy to turn around,"
Yun said.

However, while home sales are increasing in the south and west of the
country, the situation is not the same in the northeast.

The Pending Home Sales Index for the south rose 8.5 percent to 93.2 in
March, 7.7 percent above a year ago. In the west the index increased 3.9 percent
to 93.1 in March, 1.7 percent higher than for the same period last year. The
index in the northeast fell 5.7 percent to 59.5 in March, 24.1 percent below a
year ago. In the mid-west, the index slipped 1.0 percent to 82.3 but was 8.2
percent higher than March 2008.

The country's Housing Affordability Index, however, remains near record
highs. According to the National Association of Realtors (NAR), the index was
166.7 in March -- down from an upwardly revised record of 174.4 in February due
to higher home prices in March. The index is 30.8 percentage points higher than
a year ago.

NAR president Charles McMillan said the increase in buying power has been
quite remarkable.

"Compared to a year ago, a typical family today can pay much less in
mortgage costs for the same home, or buy a better home without necessarily
increasing their monthly payments," McMillan said.

"For buyers who have been on the sidelines and have good jobs, the market
has never looked more favorable. Home ownership has always offered immediate
benefits and long-term value, but the advantages in today's market are unique,"
he said.

U.S. Federal Reserve chairman Ben Bernanke said on Tuesday the three-year
U.S. housing bust may be near bottom and the recession should end this year, as
long as there is no relapse of the credit squeeze that has strangled the
economy.

For those who intend to buy homes as an investment, some financial experts
said it was difficult to predict whether the housing bust was near a bottom. As
the unemployment rate remains high, it was difficult to predict whether housing
values would grow in the short term.

Also, banks have set more strict standards in the provision of mortgage
loans, making it difficult for many potential buyers to obtain loans, although
interest rates remain at record lows.