Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.31 percent with an average 0.4 point for the week ending November 2, 2006, down from last week when it averaged 6.40 percent. Last year at this time, the 30-year FRM averaged 6.31 percent. The 15-year FRM this week averaged 6.02 percent with an average 0.4 point, down from last week when it averaged 6.10 percent. A year ago, the 15-year FRM averaged 5.85 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.05 percent this week, with an average 0.5 point, down from last week when it averaged 6.14 percent. A year ago, the five-year ARM averaged 5.76 percent. One-year Treasury-indexed ARMs averaged 5.53 percent this week with an average 0.6 point, down from last week when it averaged 5.60 percent. At this time last year, the one-year ARM averaged 5.09 percent. "Lower than expected third quarter Gross Domestic Product (GDP) figures helped to put a damper on rising rates this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "With mortgage rates down this week, we may see a spurt of refinancing by those who want to get out of ARMs that are scheduled to reset in the next year while interest rates are still comparatively low." "We are also seeing a higher number of homeowners who are taking cash out of their homes for home improvement or other needs rather than opting for a prime rate home equity loan now that the prime rate is over 8 percent."

November 6, 2006

Question: I am a first time homebuyer and thought that my credit was in good shape. However, when I applied for a loan, the lender told me that I could only quality for a sub-prime loan, which would be at a higher interest rate and that I would have to pay 4 or 5 points. Exactly what is a sub-prime loan and what should I do? Answer: There are several things you should do, including immediately looking for another lender. A sub-prime loan is generally made to persons who cannot qualify for a traditional mortgage. According to a recent study issued by the Federal Reserve Board, "The subprime category of residential mortgages includes loans made to borrowers that displayed one or more of the following characteristics at the time of loan origination: weakened credit histories stemming from payment delinquencies, charge-offs, judgements or bankruptcies; reduced repayment capacity as measured by credit scores or debt-to-income ratios, and incomplete credit histories." (July 2006 Senior Loan Officer Opinion Survey on Bank Lending Practices, issued August 14, 2006 by the Federal Reserve Board.) You say that you have a decent credit rating? Have you obtained and reviewed your credit report. There are three major credit reporting companies -- Equifax, TransUnion and Experian -- and you can get a free credit report from all of these companies once a year. Go to annualcreditreport.com for additional information. Perhaps one of these companies has listed erroneous information about you. If so, you should immediately explain this to your lender, and they may be satisfied if you send them a written explanation. You should also contact the credit reporting agency with a written statement explaining the discrepancy. Do you have any friends or relatives who may be willing to co-sign and guarantee your loan? Can you increase your deposit so that the amount of your loan will be lower than the original application. As listed in the Federal Reserve analysis, "debt-to-ratio" is often used a justification for a sub-prime loan. For example, if you applied for a 95 percent loan, and now are able to come up with more cash so that the loan is only 90 percent of the purchase price, the lower loan will reduce this ratio. These are issues you should explore with your lender. Additionally, you must talk with other lenders. The majority of sub-prime lenders are legitimate. They do serve to allow people with bad or questionable credit to be able to buy a house and join the American dream. While interest rates will be higher with a subprime loan, at least the borrowers will be able to pay a mortgage -- and get the benefits of appreciation and tax deductions -- instead of just paying rent. There are unfortunately many disreputable lenders who just want to take advantage of consumers. These are generally referred to as "predatory lenders" and there is a clear pattern to their method of operations. You make application for a conventional mortgage, at 6.25 percent. The lender takes your information, and a few days later calls you back to advise that you cannot qualify for that low mortgage. However, "we will give you a loan at 9.5 percent, with four points, and if you can demonstrate within one year that you have made all of the payments on a timely basis, you can refinance at regular rates." Is this a legitimate lender or are you the subject of a "bait and switch"? The predatory lender is prepared to make a loan to you with the expectation that you will quickly go into default, in which your house will be foreclosed upon, and the lender can start all over again with another innocent consumer. One way to determine the bona fides of that lender is to shop around. Are other lenders reluctant to make you a conventional loan? If so, stick with your original lender, but only if you carefully read the terms and conditions in your loan documents and are completely satisfied that you can make the monthly payments. You should also contact such organizations as the Better Business Bureau, your local office of consumer protection and the Federal Trade Commission to determine the status of that lender. The Department of Housing and Urban Development (HUD) also has a strong interest in weeding out these predators. Recently, HUD issued a commentary on subprime lending, pointing out some interesting facts about subprime lenders: * home refinance loans account for higher share of subprime lender's total origination than prime lenders' originations; * subprime lenders originate a larger percentage of their total originations in predominately black census tracts than prime lenders, and * subprime lenders are more likely to have terms like 'consumer,' 'finance,' and 'acceptance' in their lender names. (HUD, Homes & Communities, March 24, 2006) A final note of caution: I hope that you have a financing contingency in your contract, (I you work with an agent you will), which gives you the right to terminate your contract and get your money back if you are unable to obtain financing within a certain period of time. Read that clause carefully. Since you have been rejected for a loan, and before your contingency expires, you should advise the seller (or the seller's agent) of this fact, and either formally have the contract declared null and void or get an extension on the contingency period. If you do not take any action, you will probably lose your earnest money deposit.

October 16, 2006

Is it a housing bust or a media-driven panic? Mike Moran, chief economist for Wall Street's Daiwa Securities America, Inc., says he's surprised that virtually nobody has challenged the constant drumbeat of negative headlines and TV news warnings of imminent crashes and home price meltdowns. "It's really been way out of line with reality," says Moran, whose firm specializes in the bond market. When a 1.7 percent decline in the median home price nationwide sparks headlines about the "housing bust," that is "just pure sensationalism about what is going on here," he said in an interview. The housing market "is going through a correction that's badly needed" after five years of record sales and price appreciation. "The key issue is whether it is orderly or disorderly" -- and it's clearly the former. Yet the financial press and TV news programs are "portraying it as a catastrophe." Moran got indirect support for that view from other economists, including the Mortgage Bankers Association of America's chief economist, Doug Duncan, who said "the rhetoric is just way overwrought" -- the sky is not falling in the real estate and mortgage sectors. To the contrary, even the Federal Reserve's vice chairman believes the current correction will not be dramatic or even that long-lived, and that the housing slowdown will not have dire side effects on other parts of the economy. In a speech that went virtually unreported by major media, vice chairman Donald L. Kohn told New York analysts that the "rebalancing" of prices to better fit current demand that is underway in many metropolitan markets is a normal, cyclical event -- not an incipient disaster. In fact, it may even be a healthy and necessary part of the cycle: "The reported declines in new home prices in a number of areas should help facilitate the rebalancing of supply and demand" -- ie, lower prices should help gradually expand the number of serious buyers looking for houses. Thanks to strong underlying demographic factors -- new household formations and population growth -- the current down phase may be relatively short-lived, Kohn suggested. New housing "starts may be closer to their (low point) than to their peak." If one takes mid-summer 2005 as the peak of the multi-year housing boom, Kohn appeared to suggest that the low point of the cycle -- and the beginning of the eventual turnaround -- could be just over the horizon. The latest pending home sale index from the National Association of Realtors, which showed a surprising 4.3 percent jump in the number of sales in the contract stage, but not yet closed, supports that conclusion. Kohn also noted that other economic conditions today do not point to a deep housing price recession or bust. For example, long-term mortgage interest rates are about a point above their historic lows, the Fed itself has stopped raising short-term rates, gas prices are falling, and the unemployment rate just dropped to 4.6 percent. The current "situation stands in sharp contrast to some past downturns in the housing market" -- in the early 1980s especially -- "that followed actions b the Federal Reserve to tighten credit conditions significantly." "Continuing growth in real incomes should underpin the demand for housing," said Kohn, "and as home prices stop rising, help to erode affordability constraints."

October 16, 2006

I hate going to the dentist. I've always had good teeth, only one cavity in my head, so why spend all that money (not to mention the dental insurance) on a service I've never really needed. As long as I brush and floss, why do I need someone with a doctor's degree to look over my teeth, clean them, whiten them, etc.? Besides, I've pulled teeth myself -- when I was just a grade school kid, in fact. So if I can pull teeth at that age, with just a string and a doorknob, why on earth do I have to pay a professionally trained tooth puller now? As I reminisce on those days of my early tooth-pulling, I even recall getting paid for pulling my own teeth! That's right. Every morning after pulling my teeth, I had money under my pillow. Obviously, anyone who has received quality dental care in the past sees right through the absurdity of this argument. However, when it comes to real estate agents, everyone wants them to provide their services for discounted prices ? even free. Licensed real estate professionals bring state-mandated training and knowledge to the table for buyers and sellers. In fact, agents have to get as much, or more, training than what it would take for some college degrees before being given permission by the state to represent buyers and sellers in the transaction. By the time a transaction is over, it is chock full of legally-binding documents controlling the transaction, pulling two parties together to exchange hundreds of thousands of dollars to complete a transaction that they may be involved in only a couple of times in their life. Both the buyer and seller must perform to the contract, and most times, they don't even know how or what they're supposed to do to perform the paragraphs they just agreed to perform. Nearly half of the buyers are purchasing for the first time, according to the National Association of Realtors. They only think agents are there to usher them into houses and that's it. And that's because hundreds of thousands of agents make that tooth extraction look so easy. Why should you have a real estate agent on your investing/buying/selling team when it comes to building wealth? There's talk on Capitol Hill of how the real estate industry has a "strangle hold" on the business. It makes me want to, not so much defend, as much as bring to the forefront what licensed professionals actually bring to the table for consumers. You've heard the term, "You get what you pay for," and that doesn't go wasted on agents as well. Many sellers would love to get through the transaction themselves, without any help from a "middle man," to save the commission dollars. It sounds like it makes sense, "Hey, why pay thousands of dollars of your money to sell a house when you can do it yourself?" But every agent has a real estate license regulated by the state. This means they are knowledgeable about various aspects of real estate law, rules and regulations, such as: 1. What rights exist for land and how they can be traded 2. How title can be held and how to ensure clear title to the land 3. Financing: traditional, non-traditional, owner-held, etc. 4. Fair housing laws: federal, state and local 5. Local limits on the sale and trade of real estate 6. State disclosure laws and regulations on the trade of real estate 7. Contracts and forms Most sellers and buyers I've talked with, while having access to plenty of "information" on the internet about the sales transaction, do not have a handle on the nuances, pitfalls, and inherent dangers of legal problems they can face in the midst of this huge investment.

September 14, 2006

Condominium ownership is becoming quite popular throughout the United States. Especially, but not only, in our big cities. It seems as if condominium developments might be a win-win for everybody. For homeowners, they can be a very efficient and sometimes luxurious way of enjoying a nice lifestyle. For builders, they can represent a strong return on investment -- at least they did before prices started dropping a few months back. And in the case of high rise condominium construction, less property has to be purchased so the profit margin can be even greater. Condominiums come in all shapes and flavors. As I indicated, it seems that the newest breed are found in the urban areas. This is partly due to the trend towards urban renewal and redevelopment that is found in many portions of this country. Of course, many condominiums are also located in suburban areas. Often upscale, these units may be gated and every bit as exclusive and luxurious as their urban counterparts. When I talk about condominiums, I don't literally mean just those developments that follow a condominium form of ownership. I'm also talking about similar kinds of legal entities such as homeowners associations. The types of developments have different names in different states. However, the concept is often similar. Unit owners are responsible for and own the interior of the living spaces, often to the finished walls. The association is responsible for the areas beyond the finished walls, typically the structures themselves, the plumbing, the common sewer lines, etc. In addition, there are common elements that are controlled by the association. Typically, this might include pathways, recreation facilities, swimming pools, tennis courts, and anything else that is for the benefit of the association. Associations may have common areas and limited common areas. A common area might be something like what was described above: a park, an internal street, a pool. A limited common area might be a part of the lawn that's fenced off for the use of a particular unit owner. These are general observations. Before you purchase you must read the master deed, the bylaws and every other governing document to find out what you will own and what you will not own. It can make a big difference. As an example, some coastal condominiums have docks for the unit owners. A unit owner needs to understand who will own the dock he or she will be using. This issue is important for resale purposes, maintenance issues (which can be very costly in this example) and riparian ownership concerns. Condominium projects, with little exception, look wonderful when first built. After they are occupied by property owners, control shifts from the builder to the individual unit owners. At that time, the unit owners run the condominium association and begin full control and responsibility for the common elements. The success of the condominium association is directly related to the caliber of the association. If the association board of directors is functioning properly and has good legal counsel and other professionals, then the entire community may be an exciting, desirable place to call home. On the other hand, if the association is falling apart, if nobody wants to volunteer, if it's not governed by capable, caring people, if it doesn't retain quality professionals, or it isn't properly collecting the monthly assessments from the unit owners, then the community probably won't be a desirable place to live. And people are probably not going to continue to live there. Another concern is the extent to which the condominium is owner occupied. If most owners rent the units out, they may be collectively less concerned about day to day issues than if it is largely or entirely owner occupied. All of this means that when you purchase a condo, you can?t just look at the quality of the construction, or whether the heater works. You cannot just do the kinds of things that you would do if you are purchasing a private, single-family home. Above and beyond the normal kinds of things that you need to do, you absolutely must look at the condominium records and documents. Take a look at the minutes. Is this a properly run, stable organization? Are there constant resignations; does it appear that little ever gets accomplished? In reviewing the association documents, find out if they permit special assessments if there are one time large expenditures. The association should be able to special assess if problems arise. Watch for association documents that unreasonably restrict the right to special assess. While this restriction might seem desirable, in reality an inability to special assess can ruin a condominium development. Things that must get done might never get done properly. Ask whether the association has a functioning covenants committee? These are the internal volunteers who enforce the rules and regulations. Are they fair and reasonable people? Do they go out on a regular basis to ensure that the rules and regulations are being followed? Or is this the condominium version of the wild west where unit owners do as they please and are never asked to follow the rules. Rules are necessary in these communities and they must be fairly, even handedly enforced on a regular basis. In addition to a thorough document review, talk to people who own units. What do they have to say. Look around the development. Does it appear to be well maintained? Are their annoying signs posted everywhere suggesting dysfunction? There is no getting around the fact that due diligence in the case of a condominium purchase requires an examination of the Association records and legal documents. Examine them and ask questions before purchasing. I suggest having an attorney help you understand the association and its workings. This is an inexpensive service, and may prove down the road to be a very worth while investment.

September 14, 2006

Real Living?s new interactive Web portal allows both agents and consumers to communicate seamlessly By Stephanie Andre In April, Real Living launched an enhanced beta version of its consumer portal?MyRealLiving version 2.0. The platform, an industry-first, interactive consumer-agent interface, replicates an in-person experience with a real estate agent online. In this interview, we get the scoop from Real Living CEO and Managing Partner Harley E. Rouda Jr. on what this new platform is all about and how it could revolutionize the real estate industry. Real Estate magazine: Tell us about MyRealLiving version 2.0. Harley E. Rouda Jr.: It is an intuitive and interactive Web portal for both agents and consumers. The platform allows agents and consumers to communicate seamlessly. In essence, it acts as a fully integrated prospect and client relationship manager for our agents based on Flash 8 technology. RE: What are some of the new features in this platform? HER: For buyers, one of the key components is a property card, which looks somewhat like a Monopoly card. The card, which stores homes picked by the user, contains the property?s basic information. As buyers add homes to their profile, they can sort them as they see fit?whether that?s by features, cost or any other criteria. They can also flip the card over to write notes just by clicking on it. In addition, they can also e-mail the property cards to friends or family just by dragging the card to an e-mail icon, which creates the attachment. If a property?s status changes?whether it?s a price reduction, an open house scheduled, in contract, expired, sold or withdrawn?the user gets a notification e-mail that links them back to their personal homepage for viewing. Also through the portal, our agents can share pertinent articles with their clients, CMAs (comparative market analysis) on interested properties, all documents on the home sale or mandated forms. For sellers, the platform offers the same types of attributes?for instance, they can track properties that are in competition with their own, view articles that could help with the sale of their home and also look at all related documents. What?s even more interesting is that they are able to view all activity on the property?from the advertising to the number of Web visits on their home. RE: From the agent?s perspective, what are the benefits to using this platform? HER: Everything that is available on this site is automated. The agents don?t have to input the information?it comes automatically from our proprietary technologies and MLS data feeds?yet it is great because it provides their clients with detailed information. What?s more, although it is automated, everything presented is sent on behalf of the agent and in the name of the agent. RE: Why is this portal such an important tool for consumers to use? HER: The key thing for consumers is that they?ll have all the pertinent information they need at their fingertips, and they?ll be able to share it with others and personalize it as well. RE: How do you hope this platform will be used? HER: We foresee it being used in two ways?for prospecting as well as communicating with existing clients. Consumers can use the application as they begin looking for a home. As we all know, more than 80 percent of buyers are now researching online before ever contacting a Realtor. So, if buyers are likely to do that, they are going to use less of the agent?s time. Buyers often already know what they want. This streamlines the process. Once they connect with an agent, the Realtor can bring their negotiation skills and analysis to a higher level because they already have information on what the consumer wants. With existing clients, agents that have already-established relationships can set up a profile for the client and provide seamless, real-time information. This allows them to stay in constant communication with one another. RE: What are Real Living?s goals for version 2.0? HER: We have two primary goals?to improve the consumer experience in buying or selling a home by eliminating the mystery of information available and to ensure that Real Living?s agents are the benefactors of this success by offering them this technology that allows them to keep up with today?s e-commerce empowered world. RE: With technology moving so quickly, how do you see portals such as MyRealLiving version 2.0 evolving toward the future? HER: As technology forges ahead, I believe we will see home purchasing online?to some degree, we?re already seeing it now. The amount of buyers who find a property and their agent online is a clear sign that in some ways the process is already there. I believe that as we create richer media experiences, you?re going to see more consumers entering into contracts without even physically seeing the home. Although, I don?t believe we?ll see actual closings without physical inspections. I would imagine that the contract would state that the deal is subject to actual inspection. With local moves, buyers will still see the home before writing a contract. But for anyone relocating, the more information we can show in rich media, the more they?re going to move toward buying sight unseen. RE: It seems as though this technology could push the real estate industry toward more of an online marketplace, possibly eliminating the need for in-person interaction. Do you agree? HER: No. Even with this portal, I still believe that face-to-face interaction is very important in our business. It?s what differentiates us from the pack. The number-one reason that real estate is so different from other businesses is because every product is unique. You don?t get that when you?re selling shares of stock or cars that come off of an assembly line. Each property is personalized, and the skills of professionals coupled with their negotiation expertise will always require some sort of in-person interaction. For more information, visit www.realliving.com. Source: RISMedia?s Real Estate magazine ? May issue RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

May 9, 2006

RISMEDIA, May 10, 2006?The housing market is settling but should experience its third-best year in 2006, with job creation and a growing economy offsetting some of the effects of rising interest rates, according to the National Association of Realtors?. David Lereah, NAR?s chief economist, says the market is adjusting to higher mortgage interest rates. ?Coming off a prolonged period of record sales, housing is taking something of a breather this year,? he says. ?Even so, interest rates remain historically low, we?ve added about 2 million jobs over the last 12 months and the economy continues to grow ? that will sustain healthy levels of home sales in 2006, but they?ll stay below the peaks experienced during the last two years.? Lereah forecasts the 30-year fixed-rate mortgage to rise to 7.0 percent this summer and hold at that level during the second half of the year. The unemployment rate is expected to average 4.7 percent, compared with 5.1 percent in 2005, while growth in the U.S. gross domestic product is seen at 3.5 percent in 2006, the same as last year. Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year?s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005. NAR President Thomas M. Stevens from Vienna, Va., says home prices are returning to normal patterns. ?Since the supply of homes on the market has improved to roughly balanced levels, overall home price appreciation has cooled to single-digit rates,? says Stevens, senior vice president of NRT Inc. ?Most of the country is now entering a period of equilibrium in the housing market, which is good for the long-term health of the sector. Owners in most areas can now expect steadier and more normal rates of return on their housing investment.? The national median existing-home price for all housing types is expected to rise 5.7 percent this year to $232,200, while the median new-home price is forecast to increase 2.2 percent to $242,500. Inflation as measured by the Consumer Price Index is projected at 3.4 percent in 2006. Inflation-adjusted disposable personal income is likely to grow 3.4 percent this year.

May 9, 2006

For many people moving is one big headache and ranks as high on our list of fun as getting a tooth pulled without Novocain. Yet when you're buying and selling real estate, whether it's your primary residence or an investment property, moving belongings is part of the job. Moving typically requires numerous details and plenty of paperwork; having everything in one place will make the move easier on everyone. As you're packing up your items, the best way to ensure organization when the boxes reach your destination is to label and index all your boxes. It sounds like a lot of work but this can be a real lifesaver. When you pack your boxes, Bechen says mark what goes inside each box. You can even inventory your possessions and capture the contents on film or video. Keep a copy of the contents with the box and another one that you can put inside your notebook. If a box doesn't turn up at the new location, then you will know exactly what is missing. "The other thing that's good to do when you are labeling your boxes is to label it as bedroom box 1 and then you'll have the index with it. Then bedroom box 2, bedroom box 3, etc.," says Bechen Remember that packing and moving boxes is only part of the job. Don't forget to take care of cleaning arrangements, children and pet care. Also, "I recommend that you pack a comfort box with food, snacks, juice boxes, and water for the day of the move so that you don't have to rely on finding stuff," says Bechen. She suggests that you have two additional suitcases that will travel with you and not be shipped or packed on a moving van. Inside the suitcases pack needed medications, wet wipes, masking tape, paper towels, scissors, extra clothing, and anything else you might need immediately. A separate box should contain all your important documents and your three-ring moving notebook. Weeks before your move: * Eight weeks: set up a zippered three-ring notebook, keep all important documents in it, record payments made, have a copy of your budget, contact information, maps to your new location, keys, etc. * Six weeks: inventory and index your possessions, begin giving away items you do not need/want, make arrangements to consign items. * Four weeks: start packing up things you don't use frequently, label boxes with indexes, hold a garage sale to unload items you won't be moving, contact a moving company. * Three weeks: assemble packing materials, arrange to cancel phone and utility services and have them installed in your new location, find childcare and pet boarding, and arrange for cleaning help. * Two weeks: arrange for any necessary banking changes, service your car. * One week: order and pick up prescriptions, get keys to new home, pack two suitcases with items mentioned above and keep them handy during the move. * Two to three days before your move: defrost the refrigerator, unhook any electronics, set aside a box that contains your legal documents that you will take with you. * Day of the move: make sure your address is correct on the bill of lading, double-check everywhere in the home. A little extra planning can save you from having a move turn into a giant nightmare. "For every one minute you spend planning, you save three to five minutes in execution time." Realty Times

May 2, 2006

National Summary Pending home sales, a leading indicator for the housing sector, eased slightly but is at the second highest level on record, according to the National Association of REALTORS. The Pending Home Sales Index,* based on contracts signed in September, slipped 0.3 percent to a reading of 128.8 from a record of 129.2 in August, and is 3.3 percent higher than September 2004. The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing. David Lereah, NAR's chief economist, said the index shows a lot of momentum. "We're still seeing a post-Katrina boost in home sales activity, where the needs of displaced residents are supplementing a fundamentally strong market," he said. "Aside from this temporary lift, the market is entering a period of transition in which we will see a somewhat slower but more sustainable pace of home sales a period that is expected to be historically healthy. This will help to create a better balance between home buyer and sellers, so price appreciation should be cooler as well." Many post-Katrina sales in the region surrounding the disaster zone were bulk sales by companies that were obtaining housing for employees; some of those sales closed quickly in September with others expected to be recorded in data for October and November. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined. 2001 was the first of four consecutive record years for existing-home sales, with activity in that year being fairly close to the higher level of home sales projected for the coming decade relative to norms during the mid-1990s. A Pending Home Sales Index of 100 coincides with a historically high level of home sales. Regionally, the highest PHSI was in the South where the index slipped 1.6 percent in September to 139.1 from a record in August, and was 6.3 percent higher than September 2004. In the Northeast, the index rose 1.8 percent to 110.4 in September and was 0.8 percent above a year ago. The Midwest index rose 0.3 percent to 119.7 in September, and was 0.4 percent below September 2004. The index in the West held even at a level of 136.7, and was 3.6 higher than a year ago. The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months.

April 4, 2006