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Affordability Sets New Record

The headline from the Realtors is pretty clear:“Gain Seen in Pending Home Sales, Housing Affordability Sets New Record.” So why are the Realtors, usually eager to pump the positive, still hedging on a housing recovery? “Pending home sales have a way to go for there to be a meaningful increase,” says Lawrence Yun, the NAR’s chief economist, but the market is continuing to underperform, he adds.

Affordability is at a record high while mortgage interest rates are at record lows. Last month the existing home sales number showed a bump up in sales in February, although that coming off steep declines.

So are all these low low prices and low low interest rates really turning the overall market around?

Two other data points leave me a little skeptical today. One is the weekly mortgage application report. Yes, applications are surging, but 80 percent of new applications are for refinances, not new home purchases. Also, in the pending home sales report, when you look regionally, all regions except the West increased. The West actually fell 13.5 percent. The West is where we’ve sent he steepest drop in prices, so if you’re going on the theory that low prices are drawing the buyers in, that doesn’t appear to be the case.

Home sales had been surging in California, thanks to steep price declines and foreclosure sales. But according to Dataquick, February home sales in California actually fell from January. Of the homes that sold, 58 percent were foreclosures, compared to 33 percent a year ago. Big surprice that prices statewide are down 40 percent from a year ago.

So we still search for the bottom in this housing landslide.

I do believe that buyer traffic is picking up, and if we believe the reports, so are sales. On the way down, a drop in sales came before the price crash. Hopefully sales are leading the same way on the way back up.

Questions? Comments? RealtyCheck@cnbc.com