Americans signed less contracts to purchase previously
owned homes in May for the third month in four, falling 4.7%. This was considerably less than the 2.8% decline that expected. The drop puts the prior month’s unexplained increase into question.
All 4 regions of the country saw declines.
The annual decline (Non Seasonally Adjusted) was 14.6%. Note that this number is the measure of contract signings, and is thus a precursor to future existing home sales.
For some bizarre reason, the NAR expects Existing-home sales to grow from an annual pace of 5.01 million in the second quarter to 5.75 million in the fourth quarter. Considering Q2 is much more active than Q4 for home purchases, this forecast borders on the psychotic.
Also suspect: The NAR expects a 5.0% increase in existing home sales next year to 5.58 million.
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 loss of 4.7% (seasonally adjusted) monthly number is a negative, the 14.6% drop in the index from last
year is forecasting further housing weakness.
(I’ll see if I can scratch up a chart from somewhere)
Home Sales to Vary in Narrow Range, Then Rise in Second Half
WASHINGTON, July 08, 2008