The Cromford Market Index has reached 50 for the first time since January 2007. This represents a significant recovery from the all time low of 26.4 reached on October 30, 2007. Driving this recovery is increased demand for low-priced homes. The Cromford Supply Index has declined slightly from 212 to 178.5 over the last year, but this still represents a large overhang of unsold inventory. What has made the biggest difference is the increase in the Cromford Demand Index from 64.2 to 89.3.

It is clear that pricing affects demand. Sales and pending listings have increased the most in areas where pricing has declined the most.

Today a new record was set for the annual growth in pending listings.

Pending listings are up a staggering 52% from August 2007. Standing at 7,205 vs 4,731 this reflects the large number of sales currently in escrow. In most years, August is a relatively quiet month after the busiest period in May and June. However in August 2008 sales activity remains high and is concentrated in the lowest price ranges.

Most Arizona home builders continue to meet their obligations to customers however; there are some who are currently facing challenges in meeting their commitments to consumers. In this fantastic buyers' market, be aware of builders who might be in financial trouble and what the status of their earnest money or home completion is.

Check out below list provided by Arizona Department of Real Estate (ADRE) -- Builders in Financial Trouble.

Should you need any assistance in dealing with your builder who unfortunately is in financial trouble, feel free to call me at (480)678-9882 and I am more than happy to help.

$7500 Tax Credit now available to first time home buyers! Hurry Up! It expires June 30, 2009.

H.R. 3221, the Housing and Economic Recovery Act of 2008 — which was passed by the Congress on July 26 and signed by President Bush on July 30 — allows first-time home buyers to take a $7,500 tax credit from the purchase of a single-family home, townhome or condominium.

Any home buyer who has not owned a home during the past three years and is a U.S. citizen who files taxes is eligible to participate in this program. To qualify, buyers must actually close on the sale of the home on or after April 9, 2008 and before July 1, 2009. The program does have income limits. Single or head-of-household filers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

The National Association of Homebuilders has published a website for consumers - www.federalhousingtaxcredit.com. The site includes details and questions and answers on how home buyers can use the credit.

A 31 month down trend has finally stopped!

The annual sales rate for all areas and types has been falling steadily from a high of nearly 107,000 in October 15, 2005. In May 2008 it has stabilized at around 49,000. The sales volume for all areas and types in May 2008 is still improving and so far showing an increase of over 10% compared with April. Normal seasonal patterns indicate this is a sign of a strengthening market.

Florence is the third city, next to City of Maricopa and Queen Creek, to show a Cromford Market Index™ over 100 since February 2006, signalling a restoration of balance between buyers and sellers in this very active market. Sales per month in Florence are up over 78% and pending listings are up nearly 44% since last year and are now standing a record high level. There is now only 7.8 months supply of active listings, the lowest reading since June 2006. Since Florence is a relatively small market (174 sales per year) expect some volatility in these numbers over the coming months.

For the first time in nearly three years, home sales around the Valley have shown year-over-year improvement.

According to ASU Realty Studies department, there were 5,585 home sales in April 2008, in contrast to 4,855 a year earlier and 4,335 in March 2008. Overall, this is the first year-over-year improvement since July 2005.

The 2008 year-to-date total is 16,975 sales, down from 19,045 for the same period in 2007.

A drop in home prices is helping to lead the turnaround, but no one is sure how much further they will drop or if the sales numbers will continue to grow.

Without doubt, price dropped and volume increased is THE sign telling us the market has reached its bottom. However, it's yet to know for how long the bottom will zigzag until rebounding.

Sales per month for all areas and types just topped 5,000 today for the first time since July 28, 2007. May's sales are so far slightly ahead of April's, so we are seeing the sustained improvement in volume that we also saw in April.

Monthly dollar volume across the whole Metro Phoenix area and all types of dwelling increased from $1.265 billion in March 2008 to $1.314 billion in April. This is the first increase from March to April since 2004. While prices fell between March and April 2008, a strong increase in sales was required to achieve an increase in dollar volume.

This showed the momentum is high and the market has pretty much reached its bottom and some degree of rebound is expected.

However, I forecast such momentum will soon be diminished by more listings added to the market. There should be some lag before the market is really back on its feet.

Having that said, desired properties will be getting much less and hard to get. Still, majority of the properties on the market are not attractive enough due to either characteristics or pricing. So, expect more price drop in the next 90 days.