Here’s something that almost never happens: An NAR release came out, and I think its better than the NAR does!

The Pending Home Sales Index — based on contracts signed in September — declined 4.6% to 89.2 from the upwardly revised 93.5 in August. That is pretty awful, but is 1.6% higher than September 2007 (87.8). And as we have so painstakingly detailed, its the year over year data that is significant.

Year over year, the number has improved. As the table below shows, its doing so for one reason: Huge price decreases in the West have led to giant increases in sales.

We noted Monday, sales in California have gone up as prices have fallen.


Pending Home Sales Index (PHSI)


Propping Up Home Prices, Stopping Foreclosures (November 2008)

Pending Home Sales Down on Tight Credit and Economic Slowdown

Table (PDF)

Category: Data Analysis, Markets, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Pending Home Sales Index: Not Bad. . .”

  1. KJ Foehr says:

    There is a pony in there somewhere, right?

  2. KJ Foehr says:


    If you have any doubts about what POTUS-Elect Obama intends, check out his new web site.

    Bye-Bye Reagan Revolution.

    (and good riddance!)

  3. Tom Lindmark says:

    Don’t you have to be careful about year over year comparisons now. Since September 2007 marked the start of the cratering of the housing market, just about anything is likely to show improvement. Granted it is always useful to know how things compare to the last year but right now and for the next 6 to 9 months multi-year comparisons might be more appropriate. I suspect things looked better in 1933 than they did in 1932 but the comparison really only measured ugly and uglier.

  4. ron32 says:

    40% are investor driven foreclosure sale. Very little has changed from the bubble years, that is speculation is still rampant in the SFR market . What happens if RE values continue to decline or even stay flat for years and the carrying cost begin to eat away whatever equity they have not to mention the rental market will have to support these investors. The otherside is that the FHA has been doing quite a bit of zero to 3% down deals, again many of these foreclosures with this type of financing are allready upside down. The overall sales numbers may be up but without gov’t backing most of these sales would never have happened.

  5. leftback says:

    and to think that there are places where the RE meltdown hasn’t even begun in earnest (Manhattan, Greenwich..). The irony is that we will probably see a stock market recovery long before those housing markets hit the bottom. I agree with ron32 that it is likely to be a long flat bottom for the housing market, and a bloody good thing too. Clearing the backlog of homes and reducing the foreclosure inventory is a good thing, as it gets people who can afford houses into homes owned by those who cannot, but if the real estate whores (I mean, agents) think that they will be able to blow this bubble up anew they are sadly mistaken….

  6. Bob A says:

    Seattle area year/year pending switched positive in October although still below 2000 levels:

  7. Winston Munn says:

    Holy Foreclosure Auction, Batman,

    Wait ’til Ben the Banker, Hank the Evil, and Barney the not-so-Frank hear about this – all we have to do is let house prices fall and sales will increase.

    The economy will improve, and then the government can get back to screwing the taxpayer over the old fashioned way

    Sock! Pow! Whammo!

  8. leftback says:

    Looks like a conditional victory for the SPX 900 bounce faction over Team Armageddon, at least for today. Next week will be the decider.

  9. SWMOD52 says:

    ron32 makes a disturbing assertion.

    I always assumed that all these increased sales of homes were of the conventional kind. i.e. 20% down 30 year mortgage. This would be very positive because this would evectively take a home off the market for 30 years and put it into a strong hands. If most of these sales are not traditional home buyers that we not any closer to putting a bid under the market.

    Hard to believe that that is the case though. SFO would be about the only place I could think of where you could possible speculate in this market.

  10. AGG says:

    Grade school math question:
    If you want half the people in a country to be able to buy a house for half the cost of all available houses (e.g. $250,000), all the people who buy half the houses must:
    A) Have a job.
    B) Earn enough money to pay the monthly PITI with 25% of their monthly income.
    C) Work in a segment of the economy which has a good future.
    D) All the above.

    Bonus question:
    The monthly PITI (principal, interest, taxes, insurance) on a 30 $225,000 year mortgage at 8% ($25,000 down payment) is about $2,026.
    How much is $2,026 multiplied by FOUR?

    Super Bonus question:
    How the median income in the USA is $97,248 a year, half the income earners make:
    A) $10-15 an hour.
    B) $16-25 an hour.
    C) $26-40 an hour.
    D) $97,248 divded by 52 = $427.846 a week divided by 40 = $46.75 PER HOUR.

    Now for those brave souls in finance who think $250,000 houses are reasonably priced, I would like to know what you are smoking.

  11. AGG says:

    OOPS! $97,248 divided by 52 = 1870.15 divided by 40 = $46.75

  12. sailorman says:

    Houses in Florida are also selling with price decreases. Often they sell within a few weeks.

    So, it this a bottom or will prices drop further once more sellers start to drop the price and inventory at the current price point increases?

  13. AGG says:

    For those who have digested my uncomfortable thoughts, here’s the deal:
    We either have inflation bring wages up to where people can afford houses OR house prices WILL fall to where people making $50,000 to 75,000 a year can buy them i.e. $100,000 to $150,000.
    Stability breeds instability. All those years with a flat VIX and all those new “just in time” inventory gimmicks and all that assured labor force for peanuts is going to be history. You get what you pay for and the big boys paid us dirt so that’s what they’re going to get, good and hard. Here come the $10,000 2010 Camrys.

  14. Pool Shark says:

    No housing boom since WWII has bottomed (peak to trough) in less time than the boom itself (trough to peak):

    Bottom = 2012 or later.

    Any questions?

  15. Machiavelli999 says:

    Just like the fall of the housing market in late 2006 was the early sign that the economy was about to crater, the rising home sales is an early sign of a recovery.

    Its still a year away, but its coming guys.

  16. Greg0658 says:

    AGG – that looked like one of them 2010 Census questions.

  17. Pat G. says:

    I’d scoop up a Camry for $10K. Even a pair. His and hers. I just want to point out that there are many more ARMs to reset in the coming months, lots more unemployment, therefore more foreclosures and the banks still aren’t lending. I wouldn’t be opening a keg quite yet.

  18. philipat says:


    Incomes are not going to rise and prices will fall further. Corporate America has ultimately shafted itself. USA Inc. now has the best profit margins ever, but of course there are no sales because all the jobs (And money) are in Asia. Great strategy, hey?
    Off-topic corollary wrt the auto industry: Unfortunately it’s only Americans who would ever buy an American auto.

  19. Gene says:

    I though Minyanville had a much funnier headline:
    Jump in Pending Home Sales Forecasts Jump in Pending Failures to Close

    They reported this back in June, but it could easily apply to today’s report. In Cali, many of these “pending sales” are conditional.

    This is one straw I wouldn’t grasp.

  20. philipat says:

    Machiavelli999. If you really believe that, read this from Credit Suisse in 2007:

    We have a quiet period and then all hell breaks loose starting 2010, at a time when unemployment is peaking. By that time, even folks who can still afford payments on a 30 year fixed will be so far under water that some will start to walk away voluntarily. But don’t worry, the Guvmint will step in and bail out every single mortgage?

  21. patfla says:

    Let it be noted though that Barry is able to look on the bright side of things.

  22. I have been busting on the NAR for emphasizing the less significant monthlies, and ignoring the year over year data.

    Its finally positive, and they ignore it.