The Wall Street Journal recently reported that home affordability is at its highest level in years; this degree of affordability becomes more apparent when compared to rent prices, which continue to rise across the country. Meanwhile, ADP’s National Employment Report showed another month of strong job growth. Accelerating job growth combined with a historically high affordability index suggests that this is the near-perfect time to buy a home. We doubt that affordability will remain this high at the end of 2012. The fact is that bloated inventory levels in the Puget Sound area are falling (see enclosure). Falling inventory in many markets has spurred bidding wars. As the economy continues to improve, inventory will shrink and prices and financing costs will rise.

In the Puget Sound area we are already seeing these market forces at work. Inventories are falling, new construction remains at an all time low and Household formations continue to add to the demand for homes. Additionally recent good news from employers like Microsoft and Boeing indicate strong employment opportunities. We expect our area to lead the nation in the housing market recovery.

Home sales outpace number of new listings for first time in five years.

Northwest Multiple Listing Service members reported that last month’s total number of mutually accepted offers was 22.4 percent higher than the same month a year ago. It also marked the first month since December 2006 that the number of pending sales surpassed the number of new listings, prompting discussions of possible inventory shortages