San Fernando Valley Real Estate Blog

The National Association of Realtors® reported the Pending Home Sales Index had its 8th consecutive monthly gain in September. A Pending Home Sale is a home under contract to sell, but not yet closed. It's the longest winning streak in the history of the index, and Pending Home Sales are now at their highest levels since December 2006.

When the Pending Home Sales Index rises, it tells us that market activity has picked up. September's data confirms what we've been noticing since February; the Buyers Market is ending.

With more homes under contract in the marketplace, homebuyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Fewer seller concessions

If you are thinking of buying a home in the next several months, know that the 8-month run in Pending Sales should result in higher home prices, too.

The national housing supply fell to a 2-year low last month, according to the National Association of Realtors®. This major housing supply reduction helps to explain why multiple-offer situations have been so common lately.

Moreover, the same report from NAR showed sales activity reaching its highest point since July 2007, too. If you're looking for evidence that the long-standing Buyers Market is ending, this month's Existing Home Sales report might be it.

Even median sales prices -- typically brought down by distressed and foreclosed properties -- declined at its slowest pace in a year. Home prices are rooted in the basic economics of supply and demand.

• When supply outweighs demand, home prices fall
• When demand outweighs supply, home price rise

Since March 2009, the market has been moving in the right direction. Low mortgage rates, ample housing supply and a first-time home buyer tax credit fueled buy-side demand so that home prices are now rising in many U.S. markets. If home supplies stay on this path into 2010, expect home prices to rise even more.

According to the government, home values edged lower last month. The Federal Housing Finance Agency's Home Price Index report shows values are down by 0.3 percent from the month prior. The FHFA Home Price Index is based on the value of homes financed through Fannie Mae or Freddie Mac. The FHFA Home Price Index is more of a "national" real estate index than its private-sector cousin, the Case-Shiller Index.

The Home Price Index doesn't account for homes meeting any of the following descriptions:

1. Is considered new construction

2. Is a multi-unit property

3. Is financed by an entity other than Fannie Mae or Freddie Mac.

Because of these exceptions, some analysts label the Home Price Index incomplete. The same could be said of every method of home valuation, however. Case-Shiller only collects data from 20 markets, for example.

In light of these shortcomings, what's most important is to recognize that both of the "popular" home valuation reports show similar patterns -- home prices have leveled and are showing signs of a rebound. For a region-by-region breakdown of the Home Price Index, visit the FHFA website.

Crude oil is at its highest levels since October 2008, with retail gas up 8 cents per gallon this week. This is bad news for home buyers and mortgage rate shoppers. The same force that's driving oil higher is linked to rising mortgage rates. We're talking about the weakening U.S. Dollar. The dollar is now at its worst levels versus the Euro in 15 months .

When the dollar loses value, more of them are needed to buy the same barrel of oil. As a result, the price of crude oil goes up. There are other reasons why crude oil is rising, but the fading U.S. dollar is one of the major ones.

The dollar has a similar impact on mortgage rates. Mortgage rates are based on the price of mortgage bonds. As the dollar loses value, so do mortgage bonds. This causes demand for bonds to drop and prices on bonds to fall. Because bond prices and bond rates move in opposite directions, mortgage rates rise and this is precisely what's happening on Wall Street today.

Since touching a 5-month low in early-October, mortgage rates have raised as much as 1/2 percent, depending on the product. Moreover, with the dollar showing no signs of a rebound, the upward pressure on rates should continue.

And your everyday signal that rates are rising? Just check your price at the pump. If gas prices are up, it's likely that mortgage rates are, too. If you're trying to time the market bottom, you may have already missed it. Consider locking your mortgage rate before rates increase even more.