The Pending Home Sales Index rose 7 percent in November to rise to its highest level since April 2010, the last month of last year’s home buyer tax credit program.

The Pending Home Sales Index is published monthly by the National Association of REALTORS®. It measures homes under contract nationwide, but not yet “sold”.

In this way, the Pending Home Sales Index is different from other housing market indicators. It’s a “forward-looking” figure; a predictor of future home sales. According to the National Association of REALTORS®, more than 80% of homes under contract close within 60 days.

By contrast, housing data such as the Existing Home Sales report and the New Home Sales report “look back”.

November marks the second straight month of Pending Home Sales Index improvement. The housing market metric made big gains of 10 percent in October 2011, as well.

On a regional basis, each part of the country showed an increase in homes under contract.

• Northeast Region: +8.1 percent from October 2011
• Midwest Region : +3.3 percent from October 2011
• South Region : +4.3 percent from October 2011
• West Region : +14.9 percent from October 2011

However, here in Scottsdale, we must discount the value of even the regional data, somewhat. Like else in real estate, the volume of homes going under contract vary by locality.

Throughout the West Region, for example, the region in which pending home sales increased the most from October, there are nearly a dozen states. Undoubtedly, some of those states performed better than others in terms of “homes under contract”, but we don’t have an indication of which states those were.

In addition, within each state, every city, town, and neighborhood realized its own unique market in November, and produced its own sales statistics.

For buyers and sellers throughout Arizona and the country, therefore, it’s more important to watch data on a local level than on a national one. Reports like the Pending Home Sales Index are helpful in showing national trends, but as an individual, what you need are local trends.

For local real estate data, be sure to ask your agent.

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According to the Census Bureau, the number of new homes sold rose 2 percent in November. On a seasonally-adjusted, annualized basis, home buyers bought 315,000 newly-built homes last month.

November’s New Home Sales data marks the 4th straight month of rising sales volume, lifting the housing-market metric to a 7-month high, and adding to the housing market’s recent show of strength.

Last week, we learned that Existing Home Sales also climbed in November.

The big story in the New Home Sales report, though, is the remaining new home supply nationwide.

With just 158,000 homes “on the market” and the pace of home sales hastening, the complete, national inventory of “new homes” would now be sold in just 6.0 months, a 0.2-month improvement from October. This is the quickest home sales pace in nearly 6 years for the new construction market.

It’s even faster than in April 2010 — the buyer-deadline month of last year’s federal home buyer tax credit.

Home builders expect the trend to continue, too. Buyer foot traffic is on the rise and builders have a strong outlook for the next 6 months.

It’s an unsettling series of developments for today’s Phoenix home buyers. As home supplies drop and builders gain confidence, the ability of an buyer to negotiate for price reduction and/or upgrades shrinks.

If you’re a home buyer in search of new construction, therefore, consider that the best new construction “deals” of the next 12 months may be the ones you find today.

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The action sparked a stock market rally at the expense of mortgage bonds, sending conforming and FHA mortgage rates meaningfully higher for the first time in more than 2 months.

Markets closed early Friday and remained closed Monday. When they re-open today, conforming mortgage rates will already have bounced off last week’s new, all-time lows.

As reported by Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.91 percent nationwide, with an accompanying 0.7 discount points plus closing costs. 1 discount point is equal to 1 percent of your loan size such that 1 discount point on a $100,000 loan is equal to $1,000.

It’s not just the conventional 30-year fixed that made new lows last week, either. All of Freddie Mac’s reported rates fell to new, all-time lows.

• 30-year fixed : 3.91% with 0.7 discount points
• 15-year fixed : 3.21% with 0.8 discount points
• 5-year ARM : 2.85% with 0.6 discount points

These rates are no longer valid, however. FHA mortgage rates rose slightly last week, too.

This week, mortgage rates will be more volatile than usual. There isn’t much economic data on which to trade, and it’s a holiday-shortened week (again). Look for geopolitics and momentum to nudge markets forward, therefore — a potentially bad combination for today’s rate shoppers. There is very little room for mortgage rates to fall, but lots of room for them to rise.

If the stock market rallies to close 2011, mortgage rates will rise right on with it.

For now, rates remain historically low. If you’ve been shopping for a mortgage — waiting for rates to fall — this last week of the year may be your last chance at sub-4 percent, fixed-rate mortgage rates. Don’t wait too long or you might miss it.

It’s a good time to execute on a rate lock. Now only if the inventory for Phoenix small multifamily properties would increase so there would be something to buy.

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It’s a simple tax strategy that works because of how mortgage interest is paid, and of how the U.S. tax code is written.

Different from rent which is paid for the month ahead (i.e. “you’re paying January’s rent”), mortgage payments are made only after mortgage interest has accrued (i.e. “you’re paying for money you’ve already borrowed from the bank”).

This is called “paying interest in arrears” and U.S. tax code states that the mortgage interest is tax-deductible in its year paid, subject to limitations.

By making the January 2012 mortgage payment in December 2011, therefore, investment property owners who itemize their on their tax returns can apply their January mortgage payment’s interest portion to their 2011′s tax returns.

The alternative is to pay the mortgage on schedule, and wait for April 15, 2013 to claim the credit.

If you choose to pre-pay your mortgage and typically send your payment via USPS, give your check ample time to be delivered to your lender, and processed. Mail your check no later than Saturday, December 24.

For Scottsdale homeowners that pay electronically, the process is simpler. Edit your online bill pay program to have your mortgage payment post no later than Thursday, December 29.

Make note, however. Not all mortgage interest is eligible for tax-deductibility, and not all homeowners throughout the state of Arizona who pay mortgage interest should itemize said interest on their tax returns.

Before prepaying on your mortgage, ask your tax professional for advice.

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Housing resales moved to a Ten-month high in November, the latest in a series of strong showings from the housing sector.

According to the National Association of REALTORS®, November’s Existing Home Sales rose to a seasonally-adjusted, annualized 4.42 million units nationwide —  a 4 percent climb from October 2011.

An “existing home” is a home that has been previously occupied and cannot be categorized as new construction.

Home buyers, property investors and sellers throughout Phoenix should take note of November’s numbers because — behind the headlines — there’s a series of statistics that foretell higher home prices ahead.

First, the total number of homes for sale nationwide dipped to 2.58 million, an 18% reduction from November 2010 and represents the fewest number of homes for sale since February 2007.

At the current sales pace, the complete home resale inventory would be sold in 7.0 months.

And, second, the real estate trade group reports that 33% of all homes under contract “failed” for some reason last month.

Contract failures can occur because of mortgage denials in underwriting; home inspection issues; and homes appraising for less than their respective purchase prices.

In other words, despite a reduction in the number of homes for sale, and a rash of failed contracts, Existing Home Sales volume is still on the rise.

A special note: inventory in Greater Phoenix varies by city and neighborhood, but overall it is around

the 4 month area which means a much tighter market then the national averages.

Broken-down by buyer-type, here’s to whom home sellers were selling in November :

• First-time buyers : 35% of home resales, up from 34% in October 2011
• Repeat buyers : 46% of home resales, down from 48% in October 2011
• Investor buyers : 19% of home resales, up from 18% in October 2011

Given high demand for home resales and shrinking home supplies, we should expect that home prices will rise through December 2011 and into early-2012, at least. Recent Housing Starts data supports this notion.

Thankfully, mortgage rates remain low. Low mortgage rates help keep homes affordable.

In Greater Phoenix about 23% of sales go to investors who tent to purchase properties with cash. Many of these are entering the rental pool.

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The new construction housing market continues to show strength across the country.

According to the U.S. Census Bureau, Single-Family Housing Starts rose to 447,000 units on a seasonally-adjusted, annualized basis in November — a 2 percent increase from October.

A “Housing Start” is defined as breaking ground on new home construction.

November’s figures mark the third straight month of Single-Family Housing Starts gains. The new construction metric is now 15 percent above its all-time low, set in February of this year.

None of this should be a surprise to new home buyers in Phoenix.

Housing data has been trending better since September with sales volumes rising and home inventories falling. Basic economics tells us that home prices should soon rise.

The good news is that low mortgage rates should keep homes affordable.

Since mid-November, the average, conventional 30-year fixed rate mortgage has hovered near 4.000% nationwide with an accompanying 0.7 discount points plus closing costs. 1 discount point equals one percent of your loan size. This is down from near 4.500% six months ago, and the drop has made a big impact on home affordability.

• June 2011 : $200,000 mortgage costs $1,013.37 per month
• December 2011 : $200,000 mortgage costs $954.83 per month

This represents $700 in savings per year. It’s no wonder home builders report the highest buyer foot traffic in 3 years.

Meanwhile, the market shows little signs of slowing down. Building Permits are on the rise, too.

Permits for single-family homes rose to their highest levels of year in November and 89 percent of those homes will start construction within 60 days. This means that Single-Family Housing Starts should stay strong through the early part of 2012, and into the spring.

If you’re planning to buy new construction in Arizona , therefore, talk to your real estate agent soon and consider moving up your time frame. With mortgage rates low and next year’s buying season approaching, you may find that the best “deals” will come within the next few weeks only.

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According to foreclosure-tracker RealtyTrac, November’s foreclosure filings fell 3 percent as compared to October, and 14 percent from November 2010.

“Foreclosure filing” is a catch-all term for the various “action steps” throughout the foreclosure process. The grouping comprises default notices, scheduled home auctions, and bank repossessions.

As in most months, though, foreclosure activity remains concentrated by state. More than half of last month’s bank repossessions can be traced to just 6 states.

1. California : 14.8% of all bank repossessions
2. Florida : 12.7% of all bank repossessions
3. Texas : 7.0% of all bank repossessions
4. Georgia : 6.9% of all bank repossessions
5. Arizona : 6.7% of all bank repossessions | Phoenix REO’s For Sale
6. Michigan : 6.3% of all bank repossessions

Meanwhile, with just 5 repossessions, South Dakota topped the list of states with the fewest bank repossessions in November. The Mount Rushmore State accounted for just 0.009% of REO nationwide in a month in which bank repossessions dropped to a 44-month low point across the United States.

The drop in REO is coming at a tough time for today’s Phoenix home buyers. Distressed properties are in high demand — mostly because they sell at steep discounts.

According to the National Association of REALTORS®, distressed homes accounted for 28 percent of all home sales in October. As fewer bank-owned homes become available, though, there will be fewer “deals” to be had.

Especially as the broader housing market continues to signal its recovery.

If you plan to buy a bank-owned foreclosed property, do your research first. As supplies drop, the price for foreclosed homes throughout Arizona relative to non-distressed homes may rise, rendering REO properties less of a relative “value”.

Before you write a contract, therefore, talk with a licensed real estate agent. There’s plenty of foreclosure data available online but, when it’s time to buy, you should have an experienced agent on your side.

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The vote was nearly unanimous for the second straight month. Just one FOMC member dissented in the vote, favoring additional policy stimulus beyond what the Federal Reserve currently provides.

In its press release, the Federal Reserve sais that the the U.S. economy is improving, noting that since its November 2011 meeting, the economy has been “expanding moderately”. The Fed also added that domestic growth is occurring despite some “apparent slowing in global growth” — a nod to ongoing uncertainty within the Eurozone.

The Federal Reserve expects a moderate pace of growth over the next few quarters, and believes that the jobs market will continue to improve, but slowly.

Other potential soft spots within the economy include :

1. A slowdown in business investment
2. A “depressed” housing market
3. Strains in global financial markets

The Federal Reserve added no new policies at its December meeting, and made no changes to existing ones. It re-iterated its plan to leave the Fed Funds Rate within its current range of 0.000-0.250 percent “at least until mid-2013″ and re-affirmed “Operation Twist” — the stimulus program through which the Fed sells Treasury securities with a maturity of 3 years or less, and uses the proceeds to buy mortgage bonds with maturity between 6 and 30 years.

Mortgage bonds are mostly unchanged since the Fed’s announcement, giving mortgage rates in Phoenix little reason to rise or fall.

Mortgage rates remain near all-time lows and, for homeowners willing to pay points + closing costs, 30-year fixed rate mortgages can be locked at less than 4 percent. If you’re thinking of buying or refinancing a home, it’s a good time to lock a mortgage rate.

The FOMC’s next meeting will be its first scheduled meeting of the new year. The meeting is slated for January 24-25, 2012.

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Mortgage bonds made gains made through the early part of the week, which caused mortgage rates in Arizona to drop Monday through Wednesday afternoon. Those gains were erased, however, as 23 of 27 Euro leaders reached agreement on fiscal coordination and budget planning, sparking optimism for the future of the Eurozone, in general.

Investment Mortgage rates rose Thursday and Friday.

This week, the momentum may continue. The main story we’ll be watching is the Federal Open Market Committee’s Tuesday meeting — its 8th scheduled meeting of the year and its last until 2012.

When the Fed meets, mortgage rates are often volatile.

At its meeting, the FOMC is expected to vote the Fed Funds Rate unchanged within its current range near zero percent. However, it won’t be the Fed’s vote on the Fed Funds Rate that changes markets. Wall Street is keyed in to two other elements, instead.

The first element is the verbiage of the FOMC’s press release to markets. Issued upon adjournment, the FOMC’s press release identifies strengths and weaknesses in the U.S. economy, and offers an outlook for the future plus potential threats. The “tone” of the press release can change how mortgage bonds trade.

If the Fed describes an economy in recovery with few threat to growth, mortgage rates are likely to rise post-FOMC. By contrast, if the Fed says the economy has slowed, mortgage rates should fall.

The second element on which Wall Street is focused is the likelihood of new, Fed-led economic stimulus. Should the Federal Reserve modify existing support programs, or introduce new ones, income property mortgage rates are sure to shift. Unfortunately, we can’t know in which direction — it will depend on the size of the program and its expected impact on the U.S. economy.

The Fed adjourns Tuesday at 2:15 PM ET.

Beyond the Fed, there is other rate-moving news, too, including Tuesday’s Retail Sales report, Thursday’s Producer Price Index, and Friday’s Consumer Price Index. Each has the capacity to change mortgage rates throughout Phoenix so if you’re floating a mortgage rate, it may be a good time to lock one in.

Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with 0.7 discount points, plus closing costs.

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