Pending Sales Rise in December

Today, the National Association of Realtors released the Pending Home Sales Index for contracts signed in December 2008. On a seasonally adjusted basis the index was at 87.7 up from 82.5 in November 2008 and up from 85.9 in December 2007. 2001 was previously the slowest year for pending home sales on record. Without seasonal adjustments, November 2008 was 17.0% lower than November 2001's sales pace. The increase in month over month pending sales were due to strong seasonally adjusted gains in the Midwest and South. The increase in the year over year pending sales was mainly due to strong sales in the West. Seasonally adjusted the West saw a decrease of 3.7% month over month but an increase of 17.5% year over year. The Midwest and South increased by an average of 12.9% month over month but increased by only an average of 0.2% year over year.

The NAR made a downward adjustment in their median home sales price forecast for 2009 to $192,800. Just a few months ago, their forecast for median sales prices in 2009 was $215,800. The NAR is forecasting the median home sales price for 2010 to be $201,700.

Pending sales have settled down over the last 12 months. However, the foreclosure mix has been rising.

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Pending Home Sales Slump in November

Today, the National Association of Realtors released the Pending Home Sales Index for contracts signed in November 2008. On a seasonally adjusted basis the index was at 82.3% down 4.0% from October 2008 and down 5.3% compared to November 2007's figure of 86.9. 2001 was previously the slowest year for pending home sales on record. Without seasonal adjustments, November 2008 was 23.6% lower than November 2001's sales pace. Pending sales were bolstered by strong sales in the West. Seasonally adjusted the West saw a decrease of 2.4% month over month but an increase of 19.3% year over year. The other regions decreased by an average of 5.4% month over month and decreased by an average of 12.5% year over year.  

The NAR made a downward adjustment in their median home sales price forecast for 2009 to $198,100 (up from their forecast of $197,000 for 2008).  Just a few months ago, their forecast for median sales prices in 2009 was $215,800.  The NAR is forecasting the median home sales price for 2010 to be $207,700.  Former chief economist for the NAR, David Lereah, sees prices continuing to drop by another 5-10%.    

After relatively strong months in August and September, sales activity has dropped off considerably with the intensifying credit crunch we experienced a few months ago.  We are now entering into a period where pending home sales slow down dramatically.

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Pending home sales down moderately as prices drop

Today, the National Association of Realtors released the Pending Home Sales Index for contracts signed in October 2008.  On a seasonally adjusted basis the index was at 88.9% down 0.7% from September 2008 and down 1.0% compared to October 2007's figure of 89.8. 2001 was previously the slowest year for pending home sales on record. October 2008 was 8.0% lower than October 2001's sales pace. Pending sales were bolstered by strong sales in the West. Seasonally adjusted the West saw a decrease of 8.7% month over month but an increase of 17.4% year over year. The other regions increased by an average of 1.2% month over month and decreased by an average of 7.9% year over year.

Pending home sales are being helped by a large decrease in home prices in the West. Median home prices in the West dropped from $255,100 in September to $231,400 in October (-9.3%).  The median home price in the West is down 27.0% year over year. The other three regions are down by an average of 6.2%.

The NAR made a downward adjustment in their median home sales price forecast for 2008 to $198,500 and they lowered their 2009 median home sales price forecast to $199,200. Just a few months ago, their forecast for median sales prices in 2009 was $215,800.  We are now entering into a period where pending home sales slow down dramatically. The credit crisis is exasperating things.

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Pending home sales rise year over year; NAR lowers price forecast

On Friday, the National Association of Realtors released the Pending Home Sales Index for contracts signed in September 2008. On a seasonally adjusted basis the index was at 89.2 down 4.6% from September 2008 and also up 1.6% compared to September 2007's figure of 87.8. 2001 was previously the slowest year for pending home sales on record. September 2008 was 4.7% higher than September 2001's sales pace. This is the first time since June of 2007 that the 2001 pace was eclipsed.

The increases in pending sales was due to a large increase in the West. Seasonally adjusted the West saw an increase of 3.7% month over month and 39.6% year over year. Each of the regions declined by an average of averaged an increase of 8.5% month over month and 7.9% year over year. This is due to a large decrease in home prices in the West in August. Median home prices in the West dropped from $282,000 in July to $251,600 in August and went back up to $253,600. The median home price in the West is down 39.5% year over year. The other three regions are down by an average of 7.9%.

The NAR made a downward adjustment in their median home sales price forecast for 2008 from $200,700 to $198,600. The NAR is forecasting 2009 median home sales prices to be at $200,800. Just a couple of months ago, their forecast for median sales prices in 2009 was $215,800. October median home sales prices will be announced later this month, but they must not have been pretty. We are now entering into a period where pending home sales slow down dramatically. The credit crisis is exasperating things.

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Pending home sales were up in August; NAR lowers their price forecast yet again

The Pending Home Sales Index for contracts signed in August 2008 on a seasonally adjusted basis was at 93.4 up 7.36% from August 2008 and also up 8.86% compared to August 2007's figure of 85.8.

Without seasonal adjustments, the index was up 4.97% compared to August 2008. 2001 was previously the slowest year for pending home sales on record. August 2008 was 6.57% below August 2001's sales pace. July 2008 was 12.77% below the 2001 level.

The increases in pending sales was mostly due to a large increase in the West. Seasonally adjusted the West saw an increase of 18.4% month over month and 37.8% year over year. The rest of the regions averaged an increase of 4.8% month over month and 2.2% year over year. This is due to a large decrease in home prices in the West in August. Median home prices in the West dropped from $282,000 in July to $251,600 in August, a drop of 10.8% month over month. The rest of the country averaged a drop of 0.9% in August month over month.

It appears the housing cycle may be moving from a period of declining sales and declining prices to one of increasing sales with declining prices. According to Lawrence Yun, NAR chief economist, said “What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region." He says "It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.” Pending home sales in August were entered into before the credit crisis erupted in September.

The NAR made a downward adjustment in their median home sales price forecast for 2008 from $203,600 to $200,700. The NAR is forecasting 2009 median home sales prices to be at $206,300 (versus their projection last month of $208,500 and their projection in August of $215,800 for 2009). In June they had dropped their 2008 forecast by 4.1% from $213,700 to $205,000. We are now entering into a period where pending home sales slow down dramatically. The credit crisis isn't helping things either.

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Pending Home Sales were down in July

The Pending Home Sales Index for contracts signed in July 2008 on a seasonally adjusted basis was at 86.9 down 2.8% from 89.4 in June 2008 and is down 6.4% compared to July 2007's figure of 92.8. Without seasonal adjustments, the index was down 6.0% compared to July 2007. 2001 was previously the slowest year for pending home sales on record. July 2008 was 12.9% below July 2001's sales pace. June 2008 was 6.1% below the 2001 level.

After slightly raising their 2008 median home sales price forecast last month, the NAR made a downward adjustment from $206,700 to $203,600. The NAR is forecasting 2009 median home sales prices to be at $208,500 (versus their projection last month of $215,800 for 2009). In June they had dropped their 2008 forecast by 4.1% from $213,700 to $205,000. According to Lawrence Yun, NAR chief economist, “Pending home sales are oscillating month-to-month, with the long-term trend essentially flat." Pending home sales start to slow down dramatically in the fall and winter months.

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Pending Home Sales Index up 5.3% from previous month; down 12.1% versus last year

The Pending Home Sales Index for contracts signed in June 2008 on a seasonally adjusted basis was at 89.0 up 5.3% from 84.5 in May 2008 but was down 12.2% compared to June 2007's figure of 101.4. Without seasonal adjustments, the index was down 12.1% compared to June 2007.

2001 was previously the slowest year for pending home sales on record. June 2008 was 6.6% below June 2001's sales pace. May 2008 was 17.5% below the 2001 level.

The NAR raised their 2008 median home sales price forecast to $206,700 from $205,300. The NAR is forecasting 2009 median home sales prices to be at $215,800. In June they had dropped their 2008 forecast by 4.1% from $213,700 to $205,000. According to Lawrence Yun, NAR chief economist, sales have been in a pattern of rising and falling within a fairly narrow range. Yun said “The vacillation of data from one month to the next indicates a housing market in transition.” It does appear that home sales has bottomed out. We may be transitioning from declining home prices and sales to rising home sales with declining prices.

I don't expect home prices to bottom until supply and demand are in equilibrium. Currently there is 11.1 months supply of existing homes. 6 months is where supply and demand are considered balanced.

April, May and June are the three biggest months for Pending Home Sales. Afterwards, sales quickly taper off. Pending Home Sales for June indicates that the July and August existing sales may pick up a little bit. Last year existing sales plummeted in the Fall. This Fall will be the big test for existing sales.

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Pending Home Sales are down again in May

The Pending Home Sales Index for contracts signed in May 2008 on a seasonally adjusted basis was at 84.7 down 4.72% compared to April 2008 when it was at 88.9 and were down 14.01% compared to May 2007's figure of 98.5. Without seasonal adjustments, the index was down 14.64% compared to May 2007.

2001 was previously the slowest year for pending home sales on record. May 2008 was 17.38% below May 2001's sales pace. April 2008 was only 10.89% below the 2001 level. Lawrence Yun, NAR chief economist said that "some pullback after a sharp increase in the previous month was expected." Of course he didn't say that in last month's press release. The NAR raised their 2008 median home sales price forecast from $205,000 to $205,300. Last month they dropped their forecast by 4.1% from $213,700 to $205,000.

April, May and June are the three biggest months for Pending Home Sales. Afterwards, sales quickly taper off. Pending Home Sales for May indicates that the June and July existing sales will also be flat. Existing home sales seemed to have reached a bottom in terms of units sold while the Case-Shiller home price index shows prices are continuing to fall. It will be interesting to see what happens to home sales when the activity starts to lessen.

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Pending Home Sales improve; NAR revises home price forecast down sharply

Today, the National Association of Realtors (NAR) released the Pending Home Sales Index for April. Seasonally adjusted, the index was up to 88.2 from 83.0 in March and was down 13.1% from 101.5 in April 2007. Not seasonally adjusted, the index was down 13.8% versus a year ago. Last month the index was down 21.7% year over year. Sales are starting to show traction with lower sales prices.

2001 was the previously the slowest year since the index was started. In April 2008 the index was 11.8% lower than April 2001 and in March 2008 the index was 19.5% lower than March 2001. Compared to historical months, sales are starting to show improvement over the first few months of the year.

The NAR also releases their economic forecast at the same time as their pending home sales update. Every month they have been slowly revising their projections for housing prices downward. In March their forecast for the median prices for 2008 was $216,300; April was $215,800; May was $213,700. They have now revised their 2008 estimate down to $205,000. The median sales price for the first quarter 2008 was $198,700 and for April it was $202,300. In order to have the median sales price come to their projection, they had high projections for the third quarter of 2008. In March their forecast the median prices for the third quarter 2008 was $228,700; April was $229,600; May was $226,300. They have now dropped their third quarter forecast to $208,400. In previous posts I had questioned how and when they would revise their forecasts closer to reality. The answer was quickly and quietly. Here is how they addressed their revisions:

"After unprecedented home price declines in the first half of the year, many markets can anticipate stabilizing price trends in the second half. The aggregate median existing-home price is likely to decline 8.4 percent in the first half of this year, and then begin to stabilize in the second half before rising 4.4 percent next year to $213,900."

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Pending Home Sales are down 20% from last year; NAR remains optimistic

The National Association of Realtors (NAR) released the Pending Home Sales Index for March. Seasonally adjusted, the index was down to 83.0 from 83.8 in February and was down 20.1% from 103.9 in March 2007. Not seasonally adjusted, the index was down 21.7% versus a year ago. Last month the index was down 18.1% year over year.

2001 was the previously the slowest year since the index was started. In March 2008 the index was 19.5% lower than March 2001 and in February 2008 the index was 18.2% lower than February 2001.

The NAR has yet again revised down their projection for prices in 2008 to a decline of 2.4% to $213,700 this year. In April their forecast was calling for a decline of 1.4% to a median price of $215,800. In March their forecast was calling for a decline of 1.2% to a median price of $216,300. They have lowered their 2009 forecast to $222,600 versus last month's forecast of $223,800 for 2009.

The projection of a small decline of 2.4% in 2008 sounds very practical and modest. However prices have declined by 9.8% to a first quarter median of $197,500 from the median of $219,000 reached in 2007. In order for the median for 2008 to reach $213,700, prices for the rest of the year would have to be even higher to make up for low median recorded in the first quarter. Interestingly, even though they have lowered their forecast for 2008 and 2009, the NAR has raised their 2008 third quarter forecast to $229,600 up from their forecast last month of $228,700. $229,600 is a 16.3% increase over the first quarter's median of $197,500 and is higher than the 2007's high of $229,000. The Case Shiller CME housing futures are projecting a further decline of 9.2% from February 2008 to September 2008 (this previous post has charts). It will be interesting to see if and how the NAR will revise their figures in the future.

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Pending Home Sales Continue to Fall in February; NAR is Optimistic on Price Rebound

The National Association of Realtors (NAR) released their Pending Home Sales Index for February 2008 . The index measures contracts signed in a month. When a home closes it will be counted as an existing home sale. Seasonally adjusted the index was down 1.9% from January and down 21.4% from a year ago. Without seasonal adjustments, in February the index was down 17.4% year over year compared to being down 19.7% in January year over year.

2001 was the previously the slowest year since the index was started. In February 2008 the index was 17.5% lower than February 2001 and in January 2008 the index was 15.5% lower than January 2001.

The NAR has revised down their projection for prices in 2008 to a decline of 1.4% to a median price of $215,800. They kept their 2009 projection the same at a rise of 3.7% to $223,800 next year. Last month they projected a decline of 1.2% to $216,300 for 2008. Their projection of a small decline of 1.4% in 2008 sounds very practical and modest. However prices have declined by 10.5% to $195,900 from the median of $219,000 reached in 2007. In order for the median for 2008 to reach $215,800, prices for the rest of the year would have to be even higher to make up the low numbers recorded in January and February. They are currently forecasting median home prices to reach $228,700 by third quarter (16.7% higher than February’s $195,900). The Case Shiller CME housing futures are projecting a decline of 11.9% from January 2008 to September 2008 (this previous post discusses the futures). It will be interesting to see if and how the NAR will revise their figures in the future.

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Pending Home Sales continue to fall; NAR is optimistic

The National Association of Realtors (NAR) released the Pending Home Sales figures for January 2008. This is a measure of contracts that were signed in January. When a home closes then it will turn into an Existing Home Sale. The Pending Home Sales Index on a seasonally adjusted basis was unchanged from December 2007 to January 2008 but was down 19.6% from January 2007. The graph to the right compares Pending Home Sales and Existing Home Sales on a Seasonally Adjusted basis. The Pending Home Sales are shifted 2 months forward on the chart. You can click on the chart for a larger view.

Here is a graph showing Pending Home Sales not seasonally adjusted. Pending Home Sales for January 2008 were 15.7% lower than January 2001. 15% off of 2001 sales levels would equate to around 4.6 million existing home sales for 2008. Here is the NAR’s current forecast: “Existing-home sales are forecast to remain flat around an annual level of 4.9 million in the first half of the year before improving to a 5.8-million pace in the second half. With a weak first half, total sales for 2008 are projected at 5.38 million”.

Ultimately the amount of sales will depend on the how motivated the buyers and sellers are. If sellers are aggressive on lowering prices, then demand could pick up. This leads to the NAR’s most interesting and boldest prediction for 2008. The NAR predicts that ”The aggregate existing-home price is projected to decline 1.2 percent to a median of $216,300 this year, and then increase 3.5 percent to $223,800 in 2009. “ The aggregate existing-home price for 2007 was $219,000. A decline of 1.2% doesn’t sound too bad especially if prices rebound in 2009. The only problem is that prices have already declined to $201,100 (median existing homes sales price for January 2008). They are also projecting for the aggregate existing home price for all of 2008 to be at $216,300 (not just the month of December).

The aggregate existing home price for 2006 was $221,900. It went up as high as $229,000 in June of 2007, but then has steadily declined to $201,100 in January 2008. The Case-Shiller CME futures are projecting about a 6.5% decline from January 2008 to December 2008 (this previous post talks about the Case-Shiller CME futures).

If existing-prices declined by 6.5% they would be at around $188,000 by the end of this year. If prices steadily declined to that level, the aggregate existing home price for 2008 would be in the middle at around $194,500. This would be a decline of 11.4%. One way for the aggregate prices for 2008 to end up at $216,300, would be for home prices to instantly jump from 201,100 to around $217,000 and stay flat for the duration of the year. Another way to end up at a median of $216,300 would be for prices to move up from 201,100 in an orderly manner and end up at $230,000 by December 2008, then the median would be around $216,300. Prices would have to follow an inverse pattern in 2009 to go from $230,000 and fall steadily to $218,000 to end up with a median of $223,800 (to match the NAR’s 3.5% forecasted increase).

The NAR is notorious for revising their overly optimistic forecasts. Here are some quotes from Calculated Risk back in October 2007.

The comedians at the National Association of Realtors (NAR) revised down their forecast today for existing home sales in 2007 again. Their current forecast is for sales to be 5.78 million in 2007, down for 5.92 million last month. Compare this to their original forecast from Dec '06 of 6.4 million units in 2007. (My forecast was for existing home sales to be between 5.6 and 5.8 million units).

The NAR forecast is still too high, even after eight straight months of negative revisions. Luckily for the NAR, they still have two more downward revisions to go.

Note that Existing Sales ended up at 5.652 million for the year (Calculated Risk’s projection was very accurate).

It will be interesting to see how and when the NAR’s forecast of a decline of 1.2% in sales prices gets revised. Hopefully this was just a math error on their part and not an attempt to mislead the public.

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Existing Home Sales fall again

The National Association of Realtors (NAR) released the Existing Home Sales figures for January 2008 which were down 0.4% on a seasonally adjusted annual rate of 4.89 million units in January from an upwardly revised level of 4.91 million in December 2007, and were 23.4% below the 6.44 million unit mark in January 2007.

Existing Home inventory rose 5.5% in January to 4.19 million which is a 10.3 month supply at the current sales pace, up from a 9.7 month supply in December.

This follows downward numbers in both Pending Home Sales and New Home Sales. A Pending home sale occurs when the sales contract is signed. When the house’s sale is finalized, the home counts as an Existing Home Sale. Pending Home Sales lead Existing Home Sales by a month or two. New Home Sales are also counted when the sales contract is signed.

Here are charts showing Existing Home Sales as compared to Pending Home Sales and New Home Sales.

When there are less than 6 months supply on the market, it is generally considered a buyers market. Existing Home Inventory typically increases in the spring. Calculated Risk has a good chart on this. He expects that we will cross the 12 month supply mark this year.

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Pending Home Sales

The National Association of Realtors (NAR) released their Pending Home Sales figures for December 2007. Per the NAR, “A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.” Once they close, they become an existing sale. Seasonally adjusted, the index slipped 1.5% to 85.9 and was 24.2% below the level in December 2006. The seasonally adjusted numbers mask the dramatic fall. Using Non-Seasonally Adjusted numbers, the index dropped from 72.6 to 54.8. The index was started in 2001. 100 was the average for 2001. In December 2007, pending sales were a little more than half of the average month for 2001. December is the slowest month of the year for sales, and an average December is about 70% of an average month of pending sales. In July 2007, Pending Sales dramatically slowed. For the first half of the year, they had dropped to 2001 levels. From July to the end of the year, they averaged 89.1% of the 2001 level. The December 2007 level of 54.8 was only 78.3% of Decemeber 2001's level of 70.

We are currently on pace for existing sales of around 4.8 million. The NAR is more optimistic.
Lawrence Yun, NAR chief economist, said sales activity is expected to remain soft through the first half of the year despite a generational low in mortgage interest rates. “Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines,” Per the NAR, "Existing-home sales are projected at an annual pace of around 4.9 million in the first half of this year, rising notably to 5.8 million in the second half, and totaling 5.60 million for all of 2009."

Calculated Risk had a good post on existing sales. Here is his chart showing existing sales and inventory going back to 1969.

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