NAR Pending Home Sale Index Sort of Goes Negative

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According the National Association of Realtors, their Pending Home Sales Index fell 5.6% from August to September 2013 (seasonally adjusted), the largest monthly drop since May 2010 after the artificial prop of the 2009-2010 federal homebuyers tax credit expiration caused contracts to drop by nearly 1/3 from bloated levels.

Removing seasonality from the results makes the year-over-year adjustment show nominally 1.1% higher contract volume from September 2013 than in 2012 rather than a 1.2% decline. Still, the results were weak.

Why did pending sales post weaker results?

Don’t blame the partial government shutdown – that came later.After the May 2013 Fed surprise announcement, fence sitters surged to the market to lock in before mortgage rates rose further, bloating contract volume over the summer (and why month-over-month seasonal adjustments to this data are so very misleading).The surge in summer sales “poached” from future organic volume that we would have seen in September so we were already expecting a slow down in volume. Didn’t we learn in 2010 what happens when unusual circumstances press volume sharply higher only to see volume fall sharply when that circumstance disappears?

Weaker conditions prevail, but its really not as bad a report result as being discussed – namely because the seasonal adjustments paint a weaker picture than what actually happened, and we expected a decline in activity because the prior several months were artificially pushed higher with so many more buyers rushing to the market to beat rising rates (or the perception of rising rates).

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NAR Pending Home Sale Index Sort of Goes Negative

Posted by Jonathan Miller - Monday, October 28, 2013, 7:31 PM

[click to expand]

According the National Association of Realtors, their Pending Home Sales Index fell 5.6% from August to September 2013 (seasonally adjusted), the largest monthly drop since May 2010 after the artificial prop of the 2009-2010 federal homebuyers tax credit expiration caused contracts to drop by nearly 1/3 from bloated levels.

Removing seasonality from the results makes the year-over-year adjustment show nominally 1.1% higher contract volume from September 2013 than in 2012 rather than a 1.2% decline. Still, the results were weak.

Why did pending sales post weaker results?

Don’t blame the partial government shutdown – that came later.After the May 2013 Fed surprise announcement, fence sitters surged to the market to lock in before mortgage rates rose further, bloating contract volume over the summer (and why month-over-month seasonal adjustments to this data are so very misleading).The surge in summer sales “poached” from future organic volume that we would have seen in September so we were already expecting a slow down in volume. Didn’t we learn in 2010 what happens when unusual circumstances press volume sharply higher only to see volume fall sharply when that circumstance disappears?

Weaker conditions prevail, but its really not as bad a report result as being discussed – namely because the seasonal adjustments paint a weaker picture than what actually happened, and we expected a decline in activity because the prior several months were artificially pushed higher with so many more buyers rushing to the market to beat rising rates (or the perception of rising rates).

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Pending Home Sales: August 2013

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Pending Home Sales Surge to Five Year High

Signed contracts also declined in the West, 1.1 percent in October month-to-month and are up just 0.9 percent from a year ago. The West is suffering from a lack of supply, as investors have been scouring the landscape for a decreasing inventory of distressed properties. (Read More: Yes, Housing Starts Surge, but Rentals Are the Drivers)

Pending home sales surged in the Midwest, up 15.6 percent month-to-month and up 20 percent from a year ago. They were also higher in the south by 5.5 percent sequentially and by 17.4 percent from a year ago.

Realtors continue to warn that while this housing recovery seems to be gaining steam, changes to the mortgage interest deduction, as well as other potential hits to the economy from the so-called "fiscal cliff," could derail the momentum. (Read More: Housing Still Precarious in Obama's Second Term)

SECTOR WATCH: Construction & General Building Materials

Questions? Comments? RealtyCheck@cnbc.com

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Pending Home Sales: September 2012

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Pending Home Sales: August 2012

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Pending Home Sales: May 2012

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[Special Report] RBI Pending Home Sales Index – February 2011 [Baltimore Metro]

Posted by Jonathan Miller -Thursday, March 10, 2011, 1:47 PM
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This podcast is an overview of the RBI Pending Home Sales Index – February 2011 covering the Baltimore Metro market just released for RealEstate Business Intelligence (RBI), the data, research and analytics arm of MRIS.

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[Special Report] RBI Pending Home Sales Index – February 2011 [Washington, DC Metro]

Posted by Jonathan Miller -Thursday, March 10, 2011, 1:51 PM
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This podcast is an overview of the RBI Pending Home Sales Index – February 2011 covering the Washington, DC Metro area just released for RealEstate Business Intelligence (RBI), the data, research and analytics arm of MRIS.

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[Special Report] RBI Pending Home Sales Index – January 2011 [Washington, DC Metro]

Posted by Jonathan Miller -Sunday, February 13, 2011, 10:15 PM
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This podcast is an overview of the RBI Pending Home Sales Index – January 2011 covering the Washington, DC Metro area just released for RealEstate Business Intelligence (RBI), the data, research and analytics arm of MRIS.

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Pending Home Sales: February 2012

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[RBI Pending Home Sales Index] Washington, D.C. Metro Area 8-2011 – Despite Natural Disasters, Seasonal Patterns

[click to open release]

Today we released the RBI Pending Home Sales Index for both Washington, D.C. and Baltimore metro area housing markets for RealEstate Business Intelligence (RBI), the research, analytics arm of MRIS, the largest MLS in the country. It is released 10 days after the close of each period (the 12th this month because of the weekend), about 3 weeks before the NAR Pending Home Sale Index and 182 days before the Case Shiller Home Price Index covering the same period.

Here’s an excerpt from the just released August 2011 RBI Pending Home Sales Index [Washington, D.C. Metro Area] report:

…The last month of summer provided an unusual amount of economic uncertainty caused by the S&P downgrade of U.S. debt after July’s raucous political debates on the debt ceiling. There was a widely held expectation that consumers would delay their home purchases until they felt more comfortable with the impact to the economy. For the Washington, D.C. metro area, there was no apparent impact on the volume of new pending sales beyond seasonal patterns. There were 4,169 contracts signed in August 2011, 8.6% less than the 4,563 contracts signed in July, consistent with the 5-year 9% average month-over-month decline and the ten year 7.5% average month-over-month decline. The monthly total was the highest number of August signed contracts in 4 years. New pending sales were 19.9% above the August 2010 level but that increase is exaggerated due to the dearth of activity in the months following the expiration of the federal homebuyers tax credit in April 2010. The median sales price for August 2011 showed a similar seasonal pattern, declining 3.8% to $356,000 from $370,000 in July 2011 but was essentially unchanged from August 2011. Median sales price has averaged a 3.6% month-over-month decline over 5 years and a 2.2% month-over-month decline over ten years…

RBI Pending Home Sales Index™ [Washington, D.C. Metro Area]

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[RBI Pending Home Sales Index] Baltimore Metro Area 7-2011 – Despite Most Active July in Four Years, Baltimore Home Sales Show Weakness

[click to open release]

Today we released the RBI Pending Home Sales Index for both Washington, D.C. and Baltimore metro area housing markets for RealEstate Business Intelligence (RBI), the research, analytics arm of MRIS, the largest MLS in the country. It is released 10 days after the close of each period, about 3 weeks before the NAR Pending Home Sale Index and 182 days before the Case Shiller Home Price Index covering the same period.

Here’s an excerpt from the just released July 2011 RBI Pending Home Sales Index [Baltimore Metro Area] report:

…. There were 2,407 signed contracts in July, the most since 2007. Market activity was 6.9% below the June total of 2,585 and 24.5% above the 1,934 total in the same month a year ago. The jump from the prior year total was due to the lull in the market in the months following the April 30, 2010 contract signing deadline for the federal homebuyer tax credit and therefore overstates the improvement in the market. The average June to July seasonal decline for the past five and ten years was 3% and 3.5%, roughly half the market decline seen this year in the same period. The likely cause of the larger than normal decline was a consumer pause during the heated Washington DC debt ceiling debate for most of month…

July 2011 RBI Pending Home Sales Index™ [Baltimore Metro Area]

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[RBI Pending Home Sales Index] Washington, D.C. Metro Area 7-2011 – Signs of Slipping in Nation’s Housing Market

[click to open release]

Today we released the RBI Pending Home Sales Index for both Washington, D.C. and Baltimore metro area housing markets for RealEstate Business Intelligence (RBI), the research, analytics arm of MRIS, the largest MLS in the country. It is released 10 days after the close of each period, about 3 weeks before the NAR Pending Home Sale Index and 182 days before the Case Shiller Home Price Index covering the same period.

Here’s an excerpt from the just released July 2011 RBI Pending Home Sales Index [Washington, D.C. Metro Area] report:

The number of contracts signed for the month of July fell 10.9% from June, a larger decline than the 7.5% ten year average. While month-over-month contract activity tends to decline in July, the debt ceiling debate dominating media coverage for most of the month probably caused consumers to pause before making a purchase decision. Even with the hesitation, new pending sales reached their highest June total in six years. The 29.3% year-over-year July increase in pending sales activity was a result of last year’s lull in market activity in the months that followed the April 2010 contract signing deadline to qualify for the federal homebuyer tax credit. Median sales price slipped in July to $370,000, consistent with seasonal patterns after reaching a three year high of $379,990 in June. …

RBI Pending Home Sales Index™ [Washington, D.C. Metro Area]

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Pending Home Sales: June 2011

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[RBI Pending Home Sales Index] Baltimore Metro Area 6-2011 – Highest Contract Signings for June in 4 Years

[click to open release]

Today we released the RBI Pending Home Sales Index for both Washington, D.C. and Baltimore metro area housing markets for RealEstate Business Intelligence (RBI), the research, analytics arm of MRIS, the largest MLS in the country. It is released 10 days after the close of each period, about 3 weeks before the NAR Pending Home Sale Index and 182 days before the Case Shiller Home Price Index covering the same period.

Here’s an excerpt from the just released June 2011 RBI Pending Home Sales Index [Baltimore Metro Area] report:

…There were 2,712 signed contracts in the Baltimore metro area for the month of April, 21.8% below the tax credit-fueled surge of 3,466 in the same month last year in the waning moments of the federal stimulus program and 5.1% below the 2,857 total of the prior month. April pending sales did not keep pace with March pending sales largely due to last month’s release of pent-up demand from the lull in activity in the second half of 2010 caused by the expiration of the tax credit last spring. The April 2011 median sales price was $215,000, 6.5% less than $230,000 in April 2010 but 7.5% above $200,000 in the prior month. The first four months of 2011 resulted in the four lowest monthly median sales prices for the region since January 2005…

June 2011 RBI Pending Home Sales Index™ [Baltimore Metro Area]

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[RBI Pending Home Sales Index] Washington, D.C. Metro Area 4-2011 – Falls Short of March Burst

[click to open release]

I am reporting on the Washington, D.C. and Baltimore metro area housing markets in addition to our NYC metro area and Miami research – for RealEstate Business Intelligence (RBI), the research, analytics arm of MRIS, the largest MLS in the country. It is released 10 days after the close of each period, about 3 weeks before the NAR pending home sale index covering the same period.

Here’s a snippet from the just released April 2011 RBI Pending Home Sales Index [Washington, D.C. Metro Area] report:

…April buyers and sellers in the Washington, D.C. metro area signed 5,170 purchase contracts, the second highest April since 2006. The total was second only to the April 2010 surge in activity related to the final days of the federal homebuyer tax credit. Pending sales in April fell to 5,170, 4.8% short of the heavy volume reached in March, partly a result of last monthÕs release of pent-up demand accumulated during the post-tax credit expiration lull in the second half of 2010. The April 2011 median sales price was $334,000, nominally below $335,000 reached in same month last year and 4.4% above $320,000 in March. The month over month increase was consistent with seasonal patterns…

RBI Pending Home Sales Index™ [Washington, D.C. Metro Area]

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Pending Home Sales: January 2011

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for Janaury showing continued pullback in home sales with the seasonally adjusted national index declining 2.8% since December and remaining 1.54% below the level seen in January 2010.

It's important to note that with today's release, the NAR revised the seasonal factors affecting all data from January 2008 resulting in some notable downward revisions of past seasonally adjusted values including five downward revisions in just the past six months.

Meanwhile, the NARs chief economist Lawrence Yun appears to be smartening up and portraying the situation for housing with a bit more of a realistic outlook.

"While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system, ... We should not expect the recovery to be in a straight upward path – it will zig-zag at times."

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Labels: economy, pending home sales

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[Urbandigs] Manhattan Pending Sales Sluggish

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My friend, broker and blogger (in that order) Noah Rosenblatt over at Urbandigs is on a mission to share his analytics concepts via a free/pay subscription model. He kept me posted on its development over the past year and I gave a little feedback.

His day trading experience and approach to metrics on top of his real estate agent experience provide an interesting result. As he says, it’s still a work in progress, but hey, what isn’t? I subscribe – at $20/month, its worth it. You help him keep the lights on and it provides yet another way to look at the Manhattan housing market.

The chart above tracks pending sales activity fromt the REBNY feed with a series of rules to make the results coherent. Gotta appreciate someone who discloses their methodology. Few do.

All that talk about shortage of inventory at the end of 2010 by many in the brokerage community causing a more expensive market in the spring struck me as premature: tighter inventory serves as an offset to weak contract volume=general price stability.

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