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New home sales slipping one and a half percent in May from April but they were up almost 10% from a year ago.
And with the mortgage rates hitting yet new record.
Every week this week including.
What to make of this is the housing recovery upon us.
Ron Peltier is chairman and CEO of -- services of America eyes when it is part of Berkshire Hathaway so his bosses Warren -- one of the largest real estate brokerages in the country.
Ron do you believe that the housing recovery not just in terms of sales the prices is upon us.
Yes dig and good morning I absolutely believe that I think every indicator that we see.
Across the country would suggest that that directionally.
We are up off last year's -- Ten to 12%.
I think -- it'll be a bumpy ride so I don't think it will BF can constant upward movement but I think your directionally.
We're gonna continue to see demand increased and ultimately prices will increase as we move through this year and then through 2013.
Do you believe -- that interest rates at mortgage rates need to start moving up a little bit to really get people off the fence.
And to say -- I need to take advantage right now because as they continue to fall against people opportunity and -- white.
Well I think there are issues besides interest rates that are are creating -- problems.
If we look at our our pending it home sales day again.
Which is the kind of the current activity compared to existing home sales.
Which actually as a lagging indicator.
Sales for May were or or existing home sales were actually contracts written sixty to ninety days prior to that.
And so they're up 10%.
Over the same time a year ago.
-- pending home sales which are more current.
But we have a huge disconnect between the contract in the closing.
And the factors are very very tight underwriting standards.
And then secondarily.
We have appraisals are a huge problem.
And a lot of transactions.
Are falling out of contract because of the underwriting standards and -- the appraisals so.
I don't think it's the low interest rates those low interest rates continue to be.
A -- -- later and are causing demand.
I and we believe we have far more demand and what is actually showing up on on the close transaction existing home sales metrics.
That's the demand what about the supply looking at the building permits numbers that came out earlier in the week.
They were near a four year high do we need that inventory Ron.
We are -- and we are moving into.
The next year to two years into a very very.
Dangerously low level of inventory both for existing home sales and for new construction.
Or after six years.
Of almost no new construction replacing.
Demolish housing and the the increase in population and household formation.
We are going to see a tremendous shortage of available housing.
The demand for housing is gonna continue to move north.
As the economy shows some signs of a stabilization if not improve -- -- improvement and I think housing is gonna continue to be a slow steady climb.
I would characterize that we're not in recovery but we are recovering and it's going to be a slow steady climb over the next two years.
-- that was terrific insight as always new touch on things that people just don't when that come on this program thank you for being here.
We have busy you are and we'll see very -- Ron Peltier of -- services I think debate on the well we have breaking.
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