Pending Sales Rise 6.7%
The NAR’s Pending Home Sale index rose 6.7% over June 2008. Monthly gains (caused in large part by seasonal factors) were also up 3.6%. The biggest gains were in the South and West, regions where the foreclosure rates are the highest.
This annual number is actually a significant data point. It reflects several short term positives for Housing:
1. $8,000 tax credit (soon to be expiring)
2. ZIRP: Mortgage Rates, while up from lows, remain competitive
3. Most foreclosure moratoriums have ended; This will continue driving down prices even further, especially at the lower end of the market.
Good news: More foreclosures going forward should be stimulative of more transactions.
Bad news: July/August is the peak of transactions on a seasonal basis; Look for falling monthly sales starting in the fall through the annual January low. Also, note that once the first time tax credit is expiring, and California subsidies are being canceled due to lack of funds.
~~~
I’ll see if I can pull the trailing numbers to identify how easy or difficult the annual comparisons will be going forward.
>
Source:
Uptrend Continues in Pending Home Sales
National Association of Realtors, August 04, 2009
http://www.realtor.org/press_room/news_releases/2009/08/uptrend_pending?lid=ronav0022
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August 4th, 2009 at 12:14 pm
Pending home sales is not what anyone should look at. I’ll give a personal example. I have several rental properties, of which I had one “under agreement” as of mid July. It appears as if it will not close now, due to the buyer not having the necessary funds to purchase.
As an active real estate investor, I can tell you that many of the members in the REIA I belong to have been getting hammered with appraisals that fall below what was the sale price agreed upon, causing deals to fall apart and to be renegotiated. ACTUAL sales data is more important than the NAR nonsense.
OTOH, we featured a few RE investors that are closing on 80% of their short sale deals with banks and are making good money buying up foreclosures, short sales, and REO properties.
~~~
BR: The NAR PHSI is a function of signed contracts . . .
August 4th, 2009 at 12:17 pm
I think, at this Date, I’m fixin’ to take a Clue, and be reductive.
F411, my offer still stands: I’ll happily Trade “TBP posting Rights” w/ you.
if you want a sweetener, from my end, just say the word.
http://www.thefreedictionary.com/reductive
August 4th, 2009 at 12:32 pm
additionally: http://quotes.ino.com/chart/?s=NYBOT_DX&t=f
August 4th, 2009 at 12:38 pm
Seems like interest rates blasting higher day after day would be a negative.
How many days in a row can you have the TNX go up 10bps and still have people lining up to get long term mortgage loans?
August 4th, 2009 at 12:40 pm
BTW, pull up a YTD graph of the TNX and look at that uptrend – very solid rising diagonal there. At some point that starts to hurt.
August 4th, 2009 at 12:46 pm
Hi,
I can speak from experience to what investorinpa said about deals blowing apart. I was on the market bying a house for 4 months! The valuation piece took 3 out of those 4 months. Banks dont believe home prices have resumed their slide and are reluctant to lend. Anyway after waiting for a lot got my house in NJ ;-)
Any word on hearing the 8k tax credit being extended to next year?
August 4th, 2009 at 1:02 pm
SA – I’m not sure a 30 year mortgage at 5.4% would qualify as blasting higher, that is still historically low. . . . . three months from now? We’ll see.
August 4th, 2009 at 1:10 pm
Not sure what other “news” is out there today….but looking at the SPX charts, this does not “feel” like a market setting new highs on the year…it’s seems like its grinding into new highs. Perhaps, we get some blast off this afternoon that improves the looks of things, but for now there’s a “funny smell” about the chart…
August 4th, 2009 at 1:11 pm
Treasuries starting to look fed up with this market rally.
August 4th, 2009 at 1:12 pm
SA – I’m not sure a 30 year mortgage at 5.4% would qualify as blasting higher, that is still historically low. . . . . three months from now? We’ll see.
5.4% with personal incomes declining is getting close to record high real interest rate territory as far as I can tell.
August 4th, 2009 at 1:14 pm
Likewise treasury yields rising every day with government tax revenue imploding. How does that work out long term?
Rising borrowing costs + declining income seems like looming disaster to me.
August 4th, 2009 at 1:49 pm
I’m starting to get suspicious of this rally. I haven’t posted because I’ve been busy writing my first lectures for my class, but one wouldn’t know that from the responses. Does this mean that bearish pain has reached a peak? I usually buy when the bears are most confident, so does this mean I should sell?
Probably not–I’m not a trader.
Anyway, this data is more good news. Back to writing my lecture about how liberals are the only true believers in the free market and how FDR saved America for capitalism.
August 4th, 2009 at 2:12 pm
Don’t feed the troll
August 4th, 2009 at 2:16 pm
I wish quaint tags like “liberal” could easily explain the world. FDR did save America for something. You could call it “capitalism” if you wish. His government program to do so was called WWII. I rather thought he saved it for American imperialism.
Why is an increase in this, or any economic data point, necessarily good news? Considering that all it means is that we’ve managed to blow another bubble in real estate, I rather consider it bad news.
$1.25 trillion is the only number that matters so far as real estate is concerned. That’s the amount the fed is throwing at residential real estate. It makes all the other numbers meaningless.
August 4th, 2009 at 2:33 pm
interesting- from Yahoo Finance-
SEC moving toward banning flash orders
http://finance.yahoo.com/news/SEC-moving-toward-banning-apf-1986666746.html?x=0&sec=topStories&pos=main&asset=&ccode=
TC Says-
“$1.25 trillion is the only number that matters so far as real estate is concerned. That’s the amount the fed is throwing at residential real estate. It makes all the other numbers meaningless.”
please elaborate
August 4th, 2009 at 2:40 pm
Thor-
troll??? who could be a troll?? if I wrote something like this (see below) you don’t think it would cause others to flame me back- would it?
“Back to writing my lecture about how liberals are the only true believers in the free market and how FDR saved America for capitalism.”
hmm . . .
August 4th, 2009 at 2:43 pm
Thor
zactly! :)
August 4th, 2009 at 2:52 pm
It is improbable that we are going to see any improvement in residential or commercial real estate asset values in the next 3 to 5 years. This implies that paper linked to these asset classes will remain distressed and accrue further damage with the passage of time.
Overall these transient changes in the statistics are meaningless.
Any Backgammon players out there? It’s almost time to give the cube, only a miracle can save this economy and that ain’t gonna happen. There is no mathematical probability for that outcome. Better off buying a Power-Ball lottery ticket.
Fiscal crisis anyone….?
Best regards,
Econolicious
August 4th, 2009 at 2:57 pm
Ahab – I don’t think so, we like you and you’re not a broken record ;-)
August 4th, 2009 at 3:01 pm
What strikes me in reading everyone’s posts over the last few months is that once you’ve been here long enough it becomes fairly obvious who the negative nancy’s and overly optimistic Emilie’s are. In my opinion, most of the regular posters here would qualify as nothing more than healthy skeptics. Of course if you fall on either extreme of the spectrum you’re going to see anyone in the middle as either a bear or a bull . . . .
August 4th, 2009 at 3:06 pm
ahab-
I think F411 enjoys pushing the “FLAME ME” button.
August 4th, 2009 at 3:12 pm
stillaway-
undoubtedly- should be after 8:00 in London I would think- I hear the pubs aren’t what they use to be-
true?
outside of a stop at Heathrow- never been there myself- was at the next island over however
August 4th, 2009 at 3:41 pm
[...] reflecting several short-term positives for the housing market, FusionIQ CEO Barry Ritholtz writes at The Big [...]