Pending Home Sales stabilize after Nov tax uncertainty plunge

Dec Pending Home sales rose 1% m/o/m, right in line with expectations and follows the 16.4% plunge in Nov where there was uncertainty related to the future of the tax credit at the time which has been extended until the spring. Contract signings of existing homes rose in the Northeast, Midwest and South but fell in the West, the area that captures the most troubled markets such as Vegas, Phoenix and parts of CA. Y/o/Y however saw a 19.4% rise in the West and an overall gain of 10.5% as the comparisons remain easy and sales are boosted by the tax credit inducement and cheaper prices of foreclosures. The housing data over the past 6-8 months has been artificially influenced by the Fed’s suppression of mortgage rates and the home buying tax credit, thus as I’ve been saying, it won’t be until late spring, early summer, when these programs have run its course, will we know the true dynamic of supply and demand and thus pricing.

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