Housing Perspective: September Pending Home Sales
By AUSTIN NELSON
The National Association of Realtors (NAR) posted its monthly Pending Home Sales Index for September today, showing a pullback in the gains seen in last month’s report. The index, touted as “a leading indicator of housing activity,” is based on signed housing contracts. These contracts are not counted as sales but are taken as an indication of future sales data.
Specifically, the data show the following:
Month over month (seasonally adjusted)
- US: -4.6%
- Northeast: -16.8%
- Midwest: -0.7%
- South: -7.9%
- West: +3.7%
Year over year (seasonally adjusted)
- US: 1.6%
- Northeast: -9.4%
- Midwest: -3.1%
- South: -11.3%
- West: +39.5%
These monthly declines come following gains in August numbers (US up 6.5%). In last month’s report, the NAR pointed to the monthly figures as a sign of housing market recovery, but this month’s reversion evidences the continuing weakness of the market as a whole.
Now the polyannas at the NAR are choosing to focus instead on the year-over-year increase in the overall market, saying it indicates “we’re still in a broad period of stabilization.” However, the west region has shown a resurgence in sales and contracts are up almost 40% over this time last year, which is single handedly propping up the overall US numbers.
Taking the west out of the picture shows the US housing market as a whole continues to slide, where previously strong markets are beginning to show weakness in the face of continued economic crisis. The west is simply further along in the process of extreme market correction.
It is important to remember that this index should be taken with two very large grains of salt. The first is that these indices are based on housing contracts and do not represent completed sales. Fallout rates remain high, especially amidst a difficult lending environment.
The second, and more important, is that while sales volume may be stabilizing in some areas, sales prices are still unstable. With inventories continuing to hover at near record levels, downward pressure will still be exerted on home values.
Finally, unemployment data released today by the labor department indicate that unemployment is at a 14-year high of 6.5%. There is no reason to expect that this number will go down any time in the near future, as our economy is still locked into a death spiral of bad debt and tight credit.
This isn’t 2006 anymore, people who don’t have jobs don’t buy houses.
Tags: economy, Housing, inventory, NAR, pending, sales, unemployment
November 20th, 2008 at 4:31 am
[...] real estate markets have more recently begun to decelerate. This trend is also evidenced by recent surges in pending home sales in the West, while the Northwest is starting to [...]