Tag Archives: Pending Home Sales

US Pending Home Sales Fall 9.5% YoY In December To Lowest Level Since 2014 As Fed Unwinds

As The Federal Reserve continues to unwind its balance sheet, pending home sales YoY declined 9.5% YoY, the worst since 2014.\

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Pending home sales got a big boost from The Fed’s third round of asset purchases (QE3), but PHS are feeling the pain of The Fed’s unwind.

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Source: Confounded Interest

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US Pending Home Sales Crash Most In 5 Years

Following Case-Shiller’s report that home price gains are the weakest in four years, Pulte Homes’ CEO admission that 2019 will be a “challenging year,” and existing home sales carnage, Pending Home Sales were expected to very modestly rebound in December.

But they didn’t!

Pending home sales dropped 2.2% MoM (versus a 0.5% expected rise) to the lowest since 2014…

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This is the 12th month in a row of annual sales declines… and the biggest annual drop in 5 years…

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Yet another sign the housing market is struggling amid elevated property prices and borrowing costs – but there’s always hope…

“The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” NAR Chief Economist Lawrence Yun said in a statement.

But with mortgage rates declining recently and the Fed less likely to raise borrowing costs, “the forecast for home transactions has greatly improved.”

Finally,  the Realtors group forecasts a decline in annual home sales to 5.25 million this year from 5.34 million in 2018, which would mark the first back-to-back drops since the last recession.

Source: ZeroHedge

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Pending Home Sales Crash 7.7%, Biggest Drop In Four Years

There was some hope for a rebound in US housing indicators, after the recent existing home sales print rebounded, but that was promptly dashed after pending home sales dropped again in November, sliding -0.7% vs the expected 1.0% increase, declining in six of the last eight months, with a cumulative loss since March of -5.9% (-8.9% annualized)…

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…and crashed a whopping 7.7% compared to last year, the biggest annual drop since April 2014.

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This is the worst pending home sales print since June 2014.

https://www.zerohedge.com/sites/default/files/inline-images/pending%20home%20sales%202.jpg?itok=NxyhV0sh

Always eager to put lipstick on a pig, commenting on the collapse NAR chief economist Larry Yun said “the latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates.”

Yun added that while pending contracts have reached their lowest mark since 2014, there is no reason to be overly concerned, and he predicts solid growth potential for the long-term.

Not everyone agrees: as Bloomberg notes, the poor results underscore the challenges as elevated prices and higher mortgage rates keep many  Americans on the sidelines of the housing market. Economists consider pending-home sales a leading indicator because they track contract signings; purchases of existing homes are tabulated when deals close, typically a month or two later.

Pending home sales fell in the Midwest and South, which both dropped more than 2 percent from the prior month, while the Northeast and West saw increases. At the same time, all four major regions sustained a drop when compared to one year ago, with the West taking the brunt of the decrease. “The West crawled back lightly, but is still experiencing the biggest annual decline among the regions because of unaffordable conditions,” Yun said.

Yun suggests that affordability challenges in the West are part of the blame for the drop in sales. Home prices in the West region have risen too much, too fast, according to Yun. “Land cost is expensive, and zoning regulations are too stringent. Therefore, local officials should consider ways to boost local supply; if not, they risk seeing population migrating to neighboring states and away from the West Coast.”

While the report doesn’t signal a dramatic collapse in housing, the recovery may have trouble gaining traction. Previously released NAR data showed purchases of previously owned houses rose for a secondstraight month and exceeded forecasts in November.

Finally, not even Larry could spin the report as bullish admitting that the latest government shutdown will harm the housing market. “Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.”

That said, he did leave off on a positive note, with Yun saying he believes that there are good longer-term prospects for home sales. “Home sales in 2018 look to close out the year with 5.3 million home sales, which would be similar to that experienced in the year 2000. But given the 17 million more jobs now compared to the turn of the century, the home sales are clearly under performing today. That also means there is steady longer-term growth potential.”

Source: ZeroHedge

 

Pending Home Sales Plunge In August, Led By Collapse In The West

Pending home sales plunged in August, dropping 1.8% MoM (almost four times worse than expected) to its lowest since Oct 2014 (and fell 2.5% YoY) – the fourth month of annual declines in a row…

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As Bloomberg notes, the decline, which was broad-based across all four regions, shows that higher mortgage rates, rising prices and a shortage of affordable homes continue to squeeze buyers. Existing-home sales in August matched the lowest in more than two years, while revisions to new-home sales showed a slower market than thought, according to previously released figures.

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NAR continues to blame low inventory and affordability

“Pending home sales continued a slow drip downward,” Lawrence Yun, NAR’s chief economist, said in a statement.

“The greatest decline occurred in the West region where prices have shot up significantly, which clearly indicates that affordability is hindering buyers and those affordability issues come from lack of inventory, particularly in moderate price points.”

On a non-seasonally adjusted basis, sales In The West collapse 9.9% YoY…

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As a reminder, economists consider pending-home sales a leading indicator because they track contract signings; purchases of existing homes are tabulated when a deal closes, typically a month or two later.

Source: ZeroHedge

Pending Home Sales Decline For 4th Straight Month, Weather Blamed

Pending Home Sales rose just 0.4% MoM (missing expectations of 0.7% MoM) and saw prior months revised notably lower (Feb down from +3.1% to +2.8%).

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Weather remains the ‘go to’ blame factor from realtors as the regional differences suggest…

  • Northeast fell 5.6%; Feb. rose 10.3%
  • Midwest up 2.4%; Feb. rose 0.7%
  • South up 2.5%; Feb. rose 2.9%
  • West fell 1.1%; Feb. fell 0.7%

Unadjusted pending home sales dropped 4.4% YoY (the 4th straight month of declines – the longest streak since 2014)…

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“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” Lawrence Yun, NAR’s chief economist, said in a statement.

“Prospective buyers are increasingly having difficulty finding an affordable home to buy.”

“It is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth,” he said.

“Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers — especially first-time buyers — will be left on the sidelines.”

Purchases dropped 5.6 percent in the Northeast, reflecting multiple winter storms…

“As anticipated, the multiple winter storms and unseasonably cold weather contributed to the decrease in contract signings in the Northeast.”

As a reminder, economists consider pending sales a leading indicator because they track contract signings.

Source: ZeroHedge

Pending Home Sales Plunge In September To Lowest Since Jan 2015

Following September’s modest bounce in exisitng home sales, and explosion in new home sales (biggest jump in 25 years), today’s pending home sales was a huge disappointment, blowing the bounce back narrative.

Pending Home Sales tumbled 5.4% YoY…

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To its lowest since Jan 2015…

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Take your pick – is the housing ‘recovery’ good, bad, or ugly…

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Source: ZeroHedge

 

Pending Home Sales Plunge; NAR Admits “The Housing Market Has Essentially Stalled”

After dismal drops in existing and new home sales, this morning’s pending home sales data for August was a disaster, tumbling 2.6% MoM (3.1% YoY) to its lowest SAAR since January 2016.

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This is the second YoY decline in sales in a row, with SAAR tumbling to its lowest since Jan 2016…

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Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year.

“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” he said.

“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”

With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled.

Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead. Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South.

Yun now forecasts existing-home sales to close out the year at around 5.44 million, which comes in slightly below (0.2 percent) the pace set in 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” said Yun.

“The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

Of course, none of those fun-durr-mentals matter…

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Source: ZeroHedge

Pending Home Sales Decline Again, Index Below 2016 Level

The pending home sales index, an estimate of existing home sales, has accurately provided the direction of the monthly home resale reports.

The survey is down for the second month, providing further evidence of a housing slowdown.

The Econoday consensus estimate was for the index to rise 0.5%. Instead, the pending home sales index declined 1.3%.

“Spring sales data have not been favorable for the housing sector. Pending home sales are down for a second straight month, 1.3 percent lower in April to an index of 109.8 which is 3.3 percent below this time last year. This index tracks contract signings for resales and the results point to weakness for final sales in May and June. Final resales contracted in April as did new home sales while the month’s housing starts were also weak. Spring is the big season for housing and these are not the results of a sector that will be leading the 2017 economy.”

Pending Home Sales Fall Below 2016 Levels:

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Mortgage News Daily reports Pending Home Sales Fall Below 2016 Levels.

Pending home sales had been expected to rise slightly in April after declining 0.8 percent in March. Instead, the National Association of Realtors’® (NAR’s) Pending Home Sale Index (PHSI) slumped for the second straight month, dropping 1.3 percent. The PHSI, based on contracts signed for existing home purchases, fell from 111.3 (revised from 111.4) in March to 109.8.

The April dip put the Index 3.3 percent below its level in April 2016. This was the first year-over-year decline since last December and the largest since the Index fell 7.1 percent in June 2014.

Lawrence Yun, NAR chief economist, said the fading contract activity in the normally active spring market is due to significantly weak supply levels. These, in turn, are spurring deteriorating affordability conditions. “Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” he said. “Realtors are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.”

Yun added, “Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”

The economist sees little evidence that the record low levels of inventory will improve anytime soon. Homebuilding activity remains below the necessary levels and too few homeowners are listing their home for sale.

“The unloading of single-family homes purchased by real estate investors during the downturn for rental purposes would also go a long way in helping relieve these inventory shortages,” said Yun. “To date, there are no indications investors are ready to sell. However, they should be mindful of the fact that rental demand will soften as the overall population of young adults starts to shrink in roughly five years.”

NAR expects that existing home sales will increase about 3.5 percent from 2016 to 5.64 million units and the national median existing-home price is expected to increase around 5 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

The decline of sales was nearly nationwide in scope and all four regions are now running lower index numbers than the previous April. The West was the only region enjoying a month-over-main gain. The PHSI in the Northeast decreased 1.7 percent to an index of 97.2, now 0.6 percent lower than the previous April. In the Midwest, the index fell 4.7 percent to 104.4, a decline of 6.1 percent year-over-year.

Supply Issue?

In addition to the decline this month, the Pending Home Sales Index for March was revised lower, from -0.8 % to -0.9 %. The second quarter recovery thesis is dying on the vine.

Once again Yun blames supply. And once again Yun is wrong. If supply was triple and prices remained the same, sales would not be skyrocketing.

Of course, if supply tripled and sales did not soar, prices would drop. That is the real issue. Prices are above what buyers can afford to pay.

Although the number of resales is well below the bubble years, the median price isn’t.

Median Home Prices 1963-Present:

https://mishgea.files.wordpress.com/2017/05/median-home-prices-1963-present.png?w=768&h=266

More Trapped Home Buyers:

New home sales are recorded at signing. Existing home sales are recorded at closing.

Thus, the March report has negative implications for April and May, while the April report has negative implications for resales in May and June.

Looking ahead, existing home buyers in the last two to three years overpaid. In some areas, notably California, home buyers overpaid dramatically.

Another round of trapped home buyers unable to sell their homes is right around the corner.

For further discussion, please see Investigating Trends in Median Home Prices: When Did Price Acceleration Start?

By Mike “Mish” Shedlock