The housing market continues to spiral downward, with softness in sales and prices. As of now, the worst
housing slump in 25 years is likely to continue this year, and quite likely beyond that. (see also Housing Futures Fall Through the Roof),
The National Association of Realtors’ index of signed purchase
agreements fell 1.5% to 85.9 for December 2007. The drop in pending sales in November 2007 was revised downwards to 3% (from -2.6%)
Of course, it wouldn’t be any fun if the Housing data didn’t come with some hallucinogenic ramblings from the NAR, and the group did not disappoint this month.
Let’s start our fisking with the WTF!?! headline: "Existing-Home Sales to Hold in Narrow Range, then Begin Upward Trend."
Well, if you think a 24% drop is a narrow range, then I guess you can make so absurd a claim. Here’s the rest of their wild eyed commentary:
"A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the National Association of Realtors.
Lawrence Yun, NAR chief economist, said sales activity is expected to remain soft through the first half of the year despite a generational low in mortgage interest rates. “Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines,” he said.
“Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas – that, in turn, would help to stimulate overall economic activity."
And as we have mentioned repeatedly in the past, its not the monthly data, according to NAR’s own
methodology, but the year-over-year data that is most important to methodology of the PHSI:
"In developing the model
for the index, it was demonstrated that the level of monthly
sales-contract activity from 2001 through 2004 parallels the level of
closed existing-home sales in the following two months. There is a
closer relationship between annual index changes (from the same month a
year earlier) and year-ago changes in sales performance than with
’nuff said. Narrow range my ass . . .
No, Pending Home Sales Index Did Not Rise http://bigpicture.typepad.com/comments/2007/12/anotehr-wtf-mom.html
Pending Home Sales Index, NAR Housing Market "Bottoms" http://bigpicture.typepad.com/comments/2008/01/a-history-of-ho.html
Existing-Home Sales to Hold in Narrow Range, then Begin Upward Trend
NAR, February 07, 2008
Pending Home Resales in U.S. Fell 1.5% in December
Bloomberg, Feb. 7 2008
Outlook for Sales of Existing Homes Remains Grim
Northern Trust , February 7, 2008