Buyers are returning to the housing market.

Each month, The National Association of REALTORS^® tracks homes under contract to sell, but whose closing has not yet happened. It calls them “pending sales” and publishes a monthly report to quantify them.

The Pending Home Sales report is important because it’s meant to predict future home sales activity. History shows that 80 percent of homes under contract will “close” within 60 days, and most of the rest will close within 120 days.

If Pending Home Sales are up, it’s believed, actual home sales will be up, too.

In August, Pending Home Sales jumped 7 percent from the month prior, returning to levels not seen in over a year.

The report’s strength suggests that buyers are returning to the housing market, continuing the trend that started in March. This is tremendously good news for sellers because more buyers on the hunt means more demand for homes which, in turn, leads sale prices higher.

The Pending Homes Sales report is not a perfect predictor, however. For one, it’s not measuring an actual sale — just the expectation of one. In addition, it only accounts for “used” homes, ignoring new construction.

But that aside, the strong uptick in August tells us that home buyers are re-engaging at a quickening pace and finding that “now” is a good time to buy real estate. When buyer demand rises, the real estate market as a whole isn’t usually that far behind.

The Federal Reserve made an “emergency rate cut” this morning, dropping the Fed Funds Rate by one half-percent to 1.500 percent.

The move is meant to stimulate the U.S. economy.

When the Federal Reserve changes the Fed Funds Rate, it often takes 9 months for the changes to work their way through the economy.

On a broad scale, therefore, we won’t know if the cut truly “worked” until Summer 2009.

But, as it relates to Americans in general, the rate cut spurred two immediate changes.

First, because Prime Rate is directly tied to the Fed Funds Rate, Prime Rate fell by 0.500 percent today, too. That means that interest rates on credit card debt and home equity lines of credit are now lower, reducing monthly interest costs for the majority of American households.

The second change is that mortgage rates are rising today.

The Fed’s actions today sparked optimism in some corners of Wall Street and money is now flowing into the stock market at the expense of bonds. Because mortgage rates move in the opposite direction from bond demand, mortgage rates are higher this morning.

As always, mortgage markets and mortgage rates remain on edge. Therefore, rates are subject to change. And quickly. If you see a rate and payment you like, be ready to commit to it because it likely won’t last long.

Monday, the Dow Jones Industrial Average closed below the psychologically-important 10,000 level for the first time since 2004.

Despite the milestone-marker breach, however, there was a large group of Americans with reason to cheer. As stocks sold off, mortgage markets rallied to the benefit of home buyers everywhere.

Conforming mortgages rates improved yesterday.

Most interesting here is that rates improved for the same reason that the stock market fell. Because of lingering concerns about the worlds’ economies, investors lost their collective appetite for risk Monday. In response, they sold their stock positions and parked the proceeds in the “safe haven” of U.S. government-backed debt.

The extra demand for safe investments pushed up the prices on mortgage bond which, in turn, pushed down mortgage bond rates.

Now, we can’t predict when the market’s risk appetite will return, but when it does, expect money to flow into stocks just as quickly as it left.

All year long, with respect to stock markets, it’s been either “everybody in” or “everybody out” and, for now, it’s everybody out. This is why mortgage rates fell Monday.

But, when the momentum shifts — and it will shift — mortgage rate shoppers would do well to be prepared. Be ready to lock that mortgage rate because as soon as the stock market reverses course, mortgage rates will head higher.

If stocks recover as quickly as they tanked, expect mortgage rates to spike badly.

In this 4-minute video, turf grass specialist Carmen Magro demonstrates the proper way to prepare your lawn for Spring.

His tips include:

• How to seed “worn down” areas of a lawn
• How to control thatch to promote a healthy lawn
• How to fertilize a lawn without “overdoing it”

The Fall season is one of the most important times of the year to feed your lawn. With the advice from the video, you’ll be sure to do it right.

In an effort to provide “the most market support possible”, Fannie Mae is cutting one of its mandatory loan fees by 0.250 percent, effective immediately.

Fannie Mae introduced the Adverse Market Delivery Charge in December 2007 to offset foreclosure and delinquency losses. The initial fee was a quarter-percent of the amount borrowed.

Then, as market conditions worsened, Fannie Mae doubled its across-the-board loan fee to 0.500 percent in August of this year.

As of today, the fee is back to its starting point.

Since the start of the 2008, Fannie Mae has made 21 separate changes to its mortgage guidelines. Most have been detrimental to borrowers, increasing the difficulty, or the cost, of qualifying for a conforming home loan.

Today’s change is among the few that are beneficial.

With mortgage pricing edging higher because of the looming Congressional vote and Wall Street’s reaction to the weak jobs report, the good news is that price changes could have been worse.

Fannie Mae’s Adverse Market Delivery Charge flip-flip is keeping rates in check — perfect timing for home buyers shopping for their new mortgage.

As household budgets get pinched and credit markets tighten, a growing number of Americans are making “hardship withdrawals” from their 401(k) plans.

One major fund group cites a 15 percent increase in activity from this time last year for various reasons including staving off foreclosure and medical emergency.

However, 401(k) loans should only be made with careful consideration.

On the positive side, 401(k) loans don’t require a credit check. This is helpful feature for people deep in debt, and who may have missed a payment or two to their creditors. With no credit score requirement, a poor payment history won’t disqualify a plan participant.

In addition, most 401(k) loans can be arranged with just a phone call and a small stack of paperwork. There’s no “qualification process” like applying for a credit card or a mortgage. Money can be available, therefore, in as little as a day.

But there are negatives to 401(k) loans and the biggest one relates to taxation.

If you take a 401(k) loan and can’t repay according to its terms, the IRS taxes the loan as ordinary income and slaps on a 10 percent penalty if you’re under 59 1/2. That can be very costly for a lot of people.

But, even if you do repay the loan on time, it’s still gets expensive. This is because 401(k) loan repayments are subject to double-taxation.

The first taxation occurs when the loan is repaid because the payback is made with post-tax paycheck dollars. A person in the 25% tax bracket, for example, would need a $1,333 paycheck to repay a $1,000 loan — the missing $333 goes to taxes.

And the second taxation occurs at retirement when the funds are finally withdrawn. The IRS taxes that money as ordinary income.

Now, this isn’t to say that taking a loan against your 401(k) is bad, it just may not be the best possible route for a person in trouble. Especially because of the costs. If you’re planning to withdraw from your 401(k) for hardship, be sure to talk with a qualified financial professional first.

If you’d like a referral to a trusted professional, call or email me anytime.

Monday, after the House of Representatives defeated the Emergency Economic Stabilization Bill of 2008, the stock market fell in historic fashion.

The Dow Jones Industrial Average closed down 777.68 points, its largest one-day point loss ever.

By Tuesday, however, optimism had returned to Wall Street.

Assuming that the bill would pass in some form, investors poured back into the stock market, driving prices up. Again, in historic fashion — Tuesday’s gains were the third-largest on record.

The stock market activity is highly relevant to mortgage rates right now because when investors flee the stock market, they’re often parking their money in bonds.

In general, that causes mortgage rates to fall.

But, by contrast, when investors regain their appetite for stocks, as they did Tuesday, they move back into the market, “unparking” their bond money. This causes mortgage rates to rise.

Both Monday’s and Tuesday’s dramatic action points to the speed at which market conditions can change, taking mortgage rates with them. Wall Street’s back-and-forth mentality has been one of the reasons why mortgage rates have bounced so wildly since July.

We can’t predict if rates will fall or rise going forward, but if the stock market is any sort of a clue, in whichever direction rates go, they’re going to go there quickly.