- by New Deal democrat
This is something that I don't normally bother to cover, because it deals with existing homes, but since Bill McBride a/k/a Calculated Risk is off hiking, let's take a look.
The NAR reported this morning that pending home sales, i.e., contracts to buy existing homes, declined by 1.8% in August. This was the fourth decline in the last five months. This metric has now been negative YoY for the last eight months.
Since pending contracts become existing home sales one or two months later, this strongly suggests that existing home sales will continue their recent decline for the next several months.
According to the NAR's spokesman, Lawrence Yun:
The greatest decline occurred in the West region where prices have shot up significantly, which clearly indicates that affordability is hindering buyers.
So far, that makes perfect sense. But then he added,
and those affordability issues come from lack of inventory, particularly in moderate price points
which is somewhat misleading. Inventory has increased YoY for the last several months, which means that if we could seasonally adjust, it would probably have bottomed earlier this year. And yet prices have continued to rise.
Elsewhere, the report suggests that inventory will continue to rise, and that potential sellers haven't gotten the message that prices are too high, because Yun also said:
According to the third quarter Housing Opportunities and Market Experience (HOME) survey, a record high number of Americans believe now is a good time to sell. Just a couple of years ago about 55 percent of consumers indicated it was a good time to sell; that figure has climbed close to 77 percent today.
That 77% number isn't because they expect to have to sell at lower prices.
The takeaway from today's Pending Home Sales report is that the decline in existing home sales from its peak a year and a half ago is going to continue.