I cannot access the original data — NAR servers seem to be having problems — but here is a quick blib via Bloomberg:
"The index of pending home resales rose 6.3 percent to 88.2, the highest level in six months, following a 1 percent drop in March, the National Association of Realtors said today in Washington. Economists projected the index would fall 0.4 percent, according to the median forecast in a Bloomberg News survey of 32 economists. Estimates ranged from a drop of 1.5 percent to a 1 percent gain…
Pending resales were still down 13 percent from April 2007, today’s report showed…
The number of Americans in danger of losing their homes to foreclosure
rose to the highest in almost 30 years in the first quarter, the
Mortgage Bankers Association said June 5. The total inventory of homes
in foreclosure increased to 2.47 percent and the delinquency rate, or
loans with one or more payments overdue, grew to 6.35 percent. These
were the highest since 1979."
As we have noted many times in the past, the year-over-year Pending Home Sales Index data is what matters, not the monthly
changes. From the NAR website:
"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
While a 6.3% monthly number is an improvement over prior monthly data, the 13% drop in the index from last
year is forecasting further housing weakness.
Chart courtesy of Northern Trust
UPDATE: June 9, 2008 12:42pm
You just knew an idiot quote was forthcoming . . .
"Bargain hunters have entered the market en masse, especially in areas that have seen double-digit price declines," said National Association of Realtors chief economist, Lawrence Yun. Regions of the country that have seen sharp price declines, such as the West, are now seeing a sales recovery, he added.
"We are seeing an acceleration in foreclosures. As foreclosures have taken off, they put pressure on prices. Banks have become more aggressive with sales on homes they have foreclosed," said Christopher Low, chief economist at FTN Financial in New York.
Housing Market Is Showing Signs of a Turnaround
Pending Home Sales Index, NAR Housing Market "Bottoms" (January 2008) http://bigpicture.typepad.com/comments/2008/01/a-history-of-ho.html
Pending Sales of Existing Homes in U.S. Unexpectedly Rose 6.3%
By Courtney Schlisserman
Bloomberg, June 9 2008
I wonder what percentage of the pending home sales won’t close?
From my orange county, ca, perch, I’ve noticed an increased tendency for realtors to write weak contracts and update the listing with “taking back up offers.” Soon enough the homes come back on the market.
aaaaand as always, when confronted by horrible real actual news (Lehman) on one hand, and suspect and somewhat-misleading news on the other (pending sales info from NAR), the market goes with the shiny happy thing.
It’s time to buy the depressed, even REITS.
JB – You may be on to something. Ive been following the decline of UCBH – scary – but the insiders were stepping up and plunking down their dough just last Friday. Hopefully this isnt another Conseco where the company was fronting them the money for the purchases!!!
So one number is good and all of the other data is bad, what is that a 3-1 ratio of bad numbers? That can’t be good can it?
What I really want to know and have clarified is the first word in the headline – “PENDING”.
OT (FYI regarding bank failures)
ANB Financial Bentonville, ARK. was taken over by the FDIC on May 9.
I had bought CD’s through my broker(Schwab) from this bank.
Through Schwab, I received the balances on my CD’s June 6.
Lost about 3 weeks of interest but I am fully paid.
Don’t forget Easter was in April — Home sales were higher because Easter was in March and hence more selling days in April.
Seeing quite a few new homes around here (near Redmond, WA) with price drops to cost or below. Couple houses that were on the priced at $2.5m a year ago while being built now priced at $1.7 as builders either close to or already in bankruptcy. I’ve heard of more than one builder whose wife’s Escalade has been repo’d by the bank.
“Pending Sales” == “The check is in the mail.” When Realtors® start paying income taxes on their pendings rather than their closings I’ll start paying attention to pendings.
Let us not forget that Easter was in March this year so anything short of a meteor was bound to make April look better.
Just a continuation of “more fun with data”
regards to the update:
The San Diego “business section”-all of 2-3 pages on a good day had this as it’s top of the page:
“investors should be asking if now’s the time to buy-not the time to sell”
Taken from that wonderful bastion of level headed financial acumen known as “Smart Money”…
Gotta love that.
I’m hearing a frightening large number of morons around the office, at the club and even at church talk about, “Oh, now that property’s cheaper, we should buy some.”
These posers don’t even know what a GRM is. They couldn’t successfully fill out a loan application to buy a rental property if their life depended on it, because even the most basic rental property stats are beyond their comprehension. The only way these turkeys will ever get into the market is by fraud and liar’s loans that were intended for owner occupied property, NOT rentals for newbie landlords.
If there’s a bank stupid enough to enable these frauds, then get ready for the next wave of Foreclosures to follow.
As someone who got the actual BUSINESS loans that are required for a rental BUSINESS, it just fills me with disgust. These newbies are set for failure from they day they buy with a GRM of 42.
I tell them they can’t hope to succeed with a property at a GRM over 20, and that 12 is preferred, and they just look at me blankly. “But it’s 10% lower! It’s on sale! I’m gonna make big bucks now!”
Meanwhile locally there are so many landlords that have gone into foreclosure that the local utilities have all started special tenant payment programs to deal with non-paying landlords who are skimming both ends, taking in the rent but not paying the utilities that are supposedly included with the rental.
A sign of the times…..or bad humor?
Go ahead and add 1 to the “pending home sales”
Mark that as one to the good…..
The governor’s mansion in Texas was burned down yesterday (while under renovation). Wonder how much that is going to cost the taxpayers and who is the “person of interest.”
On the street where I live in CT one of the smaller homes has just been sold for 15% less than they were asking for it by a family that are having to sell up to avoid being foreclosed. Basically, according to gossip, they leveraged the house and frittered the money away on fancy cars, knick knacks and home improvements they haven’t got the money back for. And these are basically a two income upper middle class family. Interesting times.
Today the NAR made dramatic downward revisions to their home price projections. Last month, their forecast for home prices for the third quarter was $226,300 (compared to the current median of $202,300.) This month they dropped their third quarter forecast to $208,400. I have some charts on Pending Home Sales and the NAR forecasts here:
I am actively involved in the South Florida housing market. I can say from personal experience that banks are lowering prices dramatically and now there are multiple offers on bank owned properties.
The incompetence of the banks is slowing the closing rates, but there is a lot of activity in the foreclosed housing market and many houses are going to contract.
What the hell is a blib??
Who’s buying houses? and where do they get the money from?