I am stumped by the ongoing insistence that a turnaround in Housing is upon us. It simply is not in the data, as we saw sales of new homes fell 1.6%, plus or minus 23.9% (LOL).

Despite unusually warm weather, we still saw a sequential monthly drop in New Home Sales. The weather is more reflected in the year over year data — sales rate were 11.4% above February 2011 (which was a cold and snowy month last year).

Median sales prices, which are not seasonally adjusted, jumped 8.3%, but that’s primarily being driven by the property mix of whats going into contract. Anecdotally, we hear lots of lower end buyers having a hard time qualifying for mortgages.

Meanwhile, today’s Pending Home Sales Index also fell 0.5% to 96.5 in February from 97.0 in January but is 9.2% above February 2011 when it was 88.4. Note that this data reflects contracts, not closings. A sizable chunk of deals will fall apart.

I suspect tomorrow’s Case Shiller Index will be similarly disappointing to the Housing bulls.

You guys keep on bottom calling — you’ll get it right eventually!


Click to enlarge:



More charts after the jump


Category: Credit, 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.

30 Responses to “Pending Home Sales, Permits, Starts & Completions”

  1. Thx for the info., Barry. I, too, am puzzled by the comments of a turnaround, as noted in my recent posts (latest one was a few minutes ago): http://www.strawberryblondesmarketsummary.com/2012/03/pending-home-sales-still-declining.html

  2. Peter Boockvar says:

    Pending Home Sales in Feb, a measure of contract signings of existing homes, fell by .5% m/o/m vs expectations of a rise of 1.0%. Three of the four regions saw declines led by the South and the West. Contract signings in the Midwest rose by 6.5%. Bottom line, while the figure fell a touch m/o/m, it is off Jan the best since April ’10 in Jan but maybe the estimates were betting on more of a weather induced kick. Either way, because there have been persistent issues with failed mortgage applications and appraisals coming in below the agreed upon price level, there is still an issue of converting contract signings into closings.

  3. Pantmaker says:

    Not even close. I’m in Scottsdale…everyone’s underwater…bunch of folks “waiting”
    for better prices to sell into…crap load of bank inventory slowly falling apart…obsolete overbuilt large square footage neighborhoods that will never recover…this is going to take years not months. New construction? What is new construction?.. isn’t even a blip on the radar here (thank God). It’s a complicated mess. Party talk now is “yeah, but if I ever have to move I’ll just rent my house out, Arizona will always be good for rentals.” I say good luck with that. I built very high end custom homes for years out here…I made my hay while the sun was shining…it’s over and I have moved on. My children might see it come back some day but it won’t ever be like it was.

  4. MayorQuimby says:

    Fed’s destruction of purchasing power is not bullish for anything longer term.

  5. Pantmaker says:

    Ha! I’m in good company…just stumbled across this little gem.


    REAL-ESTATE GURU MARK HANSON made a quick visit to Phoenix and described the highlights of the housing situation this way: “In-demand inventory very low but real supply (ghost/shadow/mid-to-high end) gluttonous….Prices at their lows, massive negative and effective negative equity; too many big houses; those years of preventing defaults and foreclosures having severe unintended consequences.”

    And when you dig beneath the surface of other “recovery” markets around the nation, he asserts, “most or all of the same dynamics are at play.”

  6. HarryWanger says:

    I believe he’s talking to you, Cramer and that guy at Calculated Risk who emphatically called the bottom a few months back. Will they never learn?? No, they won’t, as history has shown.

  7. ashpelham2 says:

    There are a whole hell of a lot of us who are praying for at least a stabilization. Thing is, consumer activity is coming back and so is hiring. Why can’t there be some kind of housing “recovery”? No matter what shape it takes? Seems like eventually sales will happen, and if debts are forgiven per the new legislation, maybe some will be able to move on finally. Or at least prevent more bank owned inventory.

  8. NoKidding says:

    Saying its the bottom is different than saying its going back up.

  9. rootless says:


    At what data are you looking for your assertion the bottom in housing sales hasn’t been reached? And that those calls for a bottom have been wrong?

    All the graphics shown here, permissions, starts, and completions look to me like that collapse in these variables is over and the bottom has likely been reached.

    The same for new home sales, a graphic put up by the guy from calculatedriskblog.com:

    There is always some month-to-month variability.

    “Bottom” in housing and “turnaround” are not of the same meaning.

  10. Petey Wheatstraw says:

    A dead, or soon to be dead, cat hits several bottoms — and then, sometimes slides down hill — on its way down.

    There is nothing that would indicate the housing market will ever “come back.”

    The only way that housing will “come back” to it’s previous vigor is if the cycle of fraud is repeated, on steroids (allowing the unemployed to purchase $500K condos, based on nothing but being able to fog a mirror).

  11. zjonson says:

    I’m glad others are pointing this out. The name calling and embellishment of housing calls has gotten way out of control. The majority of people see that in many american cities we have made extremely large strides in bringing the supply and demand relationship back closer to a point of equilibrium (of course there are exceptions but comparing Scottsdale/Phoenix to the rest of America really makes no sense at all). However, we remain in a long term bottoming process that will likely take years to fully work through and will probably NEVER see the type of growth we experience during the fraud laden credit bubble.

    Additionally, why is there a consistent reliance on permit and start data to show a recovery? When shadow data is included we continue to have a supply issue so the last thing that the housing sector needs to see is an uptick in permits and starts!!

  12. Deflator Mouse says:

    Funny, I just heard James Cameron found the bottom.

  13. wally says:

    Multi-family starts up 108% year on year? Where I come from, that’s a turnaround.

  14. derekce says:

    My renters would like to buy my house, and their note would be much cheaper than their rent but their credit is ruined from their previous short sale. I think equally important to the housing supply issue, is the credit worthiness issue for lots of potential buyers. Most never had a problem before but now are shut out of the mortgage market for seven years, due to short sales, and foreclosures ruining their credit score.

  15. ashpelham2 says:

    So, at the least, a small minority of people aren’t going to be able to qualify for a mortgage again for 7 years? So, if I correlate the height of the foreclosures in this country to around 2010, then it’s 2017 before this very small percentage of people MIGHT, MIGHT qualify again for a mortgage, IF they actually want to buy again?

    The data can go both ways, but it’s mainly negative toward a housing turnaround. But I think the data points to a bottom. THE bottom? Not sure. But A bottom I think. And of course, different home categories in different locations will have varying results. I happen to think that I will see a better than expected result if I were to attempt to sell my starter home, or downsize home, to someone moving in from a northern state. That’s what my neighbors all have done: move to central Alabama from Ohio, Michigan, New York, etc…They are empty nesters, want to downsize in a warmer climate without all the hustle and bustle of a big city or Florida.

  16. Mark Down says:

    BR, needs another Black Friday call….

  17. Petey Wheatstraw says:


    Everybody is going to glom into multifamily (I assume you mean rental, and not duplexes or condos), ’cause SFHs/condos are still very much oversupplied. Problem is that rents have caught up with, and in many cases, surpassed, mortgages for equivalent homes. (also, derekce is correct about the non-creditworty, but one, arguably, also needs a good credit history, or plenty o’ money held in escrow (deposits) in order to rent).

    Remember that construction loans for multi-family homes (rental units), differs from SFHs or condos (units for sale) — in 5 years, or so, barring a drastic increase in wages, we’re going to see the next round of defaults (on multi-family rental development/construction loans), when the money floods back into SFHs, and maybe condos, from people looking to rent or buy for less money.

  18. DrungoHazewood says:


    I thought maybe I was mistaken, but you are right. I have met lots of people from Michigan, New York, ect. And not all of them retired. Leading the pack has to be Ohioans. And we even have people that have fled Florida. Its also because we now have the weather that Florida had 20 years ago, and our property taxes are among the lowest in the nation. People are planting palm trees at Lake Martin, and prices have nosedived. You can get a real nice place on the lake, or even better on the beautiful gulf coast.

  19. Iamthe50percent says:

    I’m an empty nester. I would love to sell my four bedroom two story and buy a three bedroom ranch (stairs are making me puff like the little engine that could). Builders are actually RAISING prices while young couples want foreclosure prices for existing homes. I refuse to pay $100K more for less house. I suppose the builders are seeing rising material prices. I know labor is still going down. IMHO, there can be no housing recovery until the foreclosures pass through the system and existing home sales start to rise.

    No, we won’t see the overheated market of the 2000′s, nor the boomer markets of the 1950′s-1970′s, but we should see the normal markets of the 1980′s-1990′s.

  20. Robespierre says:

    Housing bottom is nothing more than wishful thinking having the following mega-trends against it:
    1) Changing demographics: Older people downsizes or stay put. Lets not forget that housing was sold to them as “retirement nest” so it will be sold whenever possible and necessary to retire.
    2) Low wage aggregate: Fewer people can earn enough to afford a house even at these levels.
    3) Bad credit history due to short sale or foreclosure
    4) Bigger down payment
    5) The realization that housing (at least the one you live in) is not an investment but a lifestyle choice
    6) It is easier and less of a hassle to rent with several friends (young and retired people) than to buy. So increasing rents are misleading as an indicator of “cheap” housing when compared…
    7) The percentage of home owners is not going back to the level it was at the top because they really couldn’t afford it in the first place. A more normal rate of ownership is that before baby-boomers (around %50 or so?). To me the only way to avoid going back to %50 from current (%60?) is for housing to drop more.
    2000 1990 1980 1970 1960 1950 1940 1930 1920 1910 1900
    66.2% 64.2% 64.4% 62.9% 61.9% 55.0% 43.6% 47.8% 45.6% 45.9% 46.5%

    8) Nothing was done to save the homeowners. All was done to save the bankers.

  21. Through the Looking Glass says:

    As Petey Wheatstraw points out :The only way that housing will “come back” to it’s previous vigor is if the cycle of fraud is repeated.

    Thankyou Petey… the truth is so simple to some but most have to go through 100 geniuses pointing out how complicated reality is and 99% of the hoards never see past the sophistry that sell their agenda .

    Turn your heads now sheeple here is some simple truth you dont want to read, return to your favorite sophist’s smoke and mirror revelation.


  22. blackjaquekerouac says:

    this is not rocket science. i simply don’t understand the manipulation of the data. incomes are incomes. recoveries are recoveries. while the collapse is behind us the recovery is still more than adequate to “kill the patient” on this one. Politics from Washington which destroyed the market in the first place (inverted yield curve for years Greenspan) caused an even worse “cure” in the form of bank bailouts, soaring costs for everything and a collapsed labor market “which was to be fixed by the construction industry” of all things. The policy makers have completely failed…and with Wall Street trying to pimp the failure just as they did the MBS we all get the inevitable result: housing stocks which have soared to start the year are now getting clobbered. GREAT time to buy a house…or any other consumer discretionary for that matter. Just “not quite there yet.” Go long Ebay.

  23. wally says:

    Demand for apartments has been rising for four years now, probably at a faster rate than population increase (because home ownership percentages are declining) and most people who are looking to rent an apartment are not potential buyers for one reason or another. The proof of this is the extreme low vacancy rates in many parts of the country. When vacancies are this low and money is dirt cheap, it is the time to build apartments. That’s where we are now.
    The effect of this building will be to put construction workers back to work – many have been sidelined now for literally years. Additional workforce means additional GDP; a drop in unemployment of three or four percent should contribute three or four percent to GDP.
    Single family comes later… but it will come. Living outdoors will just never be a fashionable substitute for houses.

  24. pintelho says:

    The “can’t get a loan” thing is a Canard of the largest proportions. If you have the appropriate complying debt to income ratios, and your loan is conforming to Fannie/Freddie guidelines… you can get a loan quite easily in this world. This has been true for at least 2 years as I have been able to close on 1 refinance and 1 purchase in the last year. So loans are available and easy to obtain, you just have to be a qualified buyer with the qualified conditions…you know… like it used to be back in the days before the liar loans and ninja borrowers.

    Please BR, kill that zombie lie. Loans are being made for qualifying borrowers in qualifying conditions. Period.

  25. MayorQuimby says:

    Housing will “recover” when wages rise and not before. Wages will rise when unemployment rate drops below 7 percent and not before.

    Unemployment rate will drop below 7 percent when the real economy grows and the Fed stops destroying purchasing power with counterfeit liquidity and not before.

    And even THEN we need to see tuition costs drop and more deleveraging.

    We have YEARS and years before we get a recovery and that’s if the system is even around for that long.

  26. Winston Munn says:


    I agree with your assessment that rising wages would help, but keep in mind that falling prices would accomplish the same goal. And that is the catch-22 of housing – no one in power can afford to allow home prices to fall else the value of the underlying collateral collapses and all those mark-to-make-believe assets still on the books suddenly get a reality check, yet allowing prices to fall would be the quickest method of resolving the housing glut and kickstart a stronger recovery.

  27. Giovanni says:

    I’m a multifamily guy and our business has been enjoying the convergence of three trends, ZRP, growing renter demographics and lack of new construction of apartments. One thing that does have me concerned is if serious money gets behind buying up single family REOs and now both Buffett and Tom Barrack are starting to do just that. Good for housing, and people who want to live in a house without buying it but not so good for apartment demand.

  28. sailorman says:

    The housing market is as local as politics. Houses in Florida led the market down — many areas dropping as much as 40%.

    Housing in Sarasota has definitely bottomed. Enough houses sell to establish a fair price and when a house comes in the market priced correctly, about 2002 level, it sells in a few weeks. Inventory is low and every broker says the volume of lookers is close to the good years of 2002 – 2006. All buyers are wary and very aware of the current price level. They do buy when a house is priced at the new normal.

    The inventory of houses on the market in my community is the lowest in 10 years and the time on market is shrinking as more and more people price the house properly and except the new normal.

    Two years ago, you could buy a single family house in a beach community; not on the water, but a community that owned a private beach with a private ferry to take you across the inland waterway. You could buy that for under $150,000. If you priced one of these houses at $150,000 today, it would sell in a day with multiple bids.

    Florida led the way down, perhaps it is now signalling a bottom.

  29. [...] prices have sunk back to 2003 levels. Pending home sales eased in February. Barry Ritholtz is stumped by the insistence that a turnaround in housing is upon us: “It simply is not in the data.” [...]