The National Association of Realtors just released the latest data on pending home sales. The June figures continued the recent trend of improvement …
* Pending home sales climbed 3.6% in June. That was much better than the 0.7% gain that economists were expecting. Last month’s 0.1% gain was also revised higher, to 0.8%.
* On a year-over-year basis, the pending sales index was up 6.7% to 94.6 from 88.7. That’s the highest index value going all the way back to June 2007.
* Pendings gained in all four regions of the country. They rose 0.4% in the Northeast, 0.8% in the Midwest, 2.9% in the West, and 7.1% in the South.
Slow and steady improvement is the story in the U.S. housing market. Pending home sales rose in June on both a month-over-month and year-over-year basis. Moreover, the improvement was broad-based. We saw sales gains in all four regions of the country, and the pending index overall hit its highest level in almost two years.
We won’t return to the “glory days” of the mid-2000s in housing, but frankly, that’s a good thing. I’d much rather see steady, consistent gains in sales; steady, consistent reductions in the rate of price depreciation; and steady, consistent declines in home inventory. That’s exactly what is happening, and what should continue to happen as long as mortgage rates don’t spike too sharply and/or unemployment doesn’t worsen materially from here.
Incidentally, this improvement in the numbers should come as no surprise to you. I told you three months ago that the housing data was going to improve and that the time to be negative on the sector was past. Here’s that piece, if you didn’t catch it the first time around.
Related posts:
- Pending home sales climb 3.2% in July The National Association of Realtors released its data on pending home sales today. Here’s what the numbers looked like …...
- Pending home sales surge 6.1% in September We just got pending home sales figures from the National Association of Realtors. Here’s what they looked like: * Pending...
- Pending home sales dip in March It’s pending home sales day again. This time, the National Association of Realtors is providing data on pending sales activity...
{ 6 comments… read them below or add one }
Mike-I have trouble understanding the relationship between housing prices and the continuing financial crisis generally. If Martin is correct and there is another phase to this meltdown which could be even worse than what we have experienced so far it seems that this could push housing prices further down. I’m not sure how there can be a bottom in housing prices until employment stabilizes. If you could speak to this in a future post I would appreciate it.
Mike Larson Reply:
August 5th, 2009 at 9:04 AM
I have never said that I believe home PRICES are done going down. I expect further declines in home prices, probably on the order of 5% - 10% over the next 12-18 months. But that is a much more gradual pace of deterioration than we’ve seen the past two-three years. On the other hand, home SALES rates have likely bottomed, as has home CONSTRUCTION. Home INVENTORIES have likely topped, if you combine new and existing homes.
I keep seeing the same kinds of questions and comments on housing. So rather than give the same answers multiple times, I will simply say this: Housing is just not a huge issue any more. The ratios that were dramatically out of whack (home prices to incomes, monthly mortgage payments vs. rent, and so on) are now mostly in line with historical averages, or close to it. House and condo prices have already plunged 50%-60% from peak levels in some of the hardest hit areas. The damage has already laregly been done. Do I expect a great recovery and a return to the so-called “glory days”? No. This is going to be more like the post-2000-2002 Nasdaq bust, where it’s a long, slow painful process. But I do think the battleship is slowly turning and if you’re short these stocks, you’re going to be sorry.
It is a good thing if we don’t return to the bubble of the mid 200s, and I certainly hope we don’t. But I personally don’t think this trend will continue. Isn’t summer usually the busiest time for real estate? June is right smack dab in the middle of summer. I also don’t think it will continue because there are people like me, who can buy, but who won’t buy because conditions have deterioriated in the cities we live in (I live in Phoenix area), and we are worried about jobs. Even those who are working are not necessarily making enough to buy a house (or a cash for clunker car, for that matter). But I guess never underestimate the stupiditiy of people. They will buy even when it might not necessarily be a good thing for them to do. Also, once again, pending home sales are not closed sales.
Watching the interest rate climb today to 6% for FHA loans. This is what my boyfriend and I are going with since we can put down just 3.5%. However, we are at the low end in a high end market (Stamford, CT) What places we could afford have just gotten out of reach with the interest rates going up. It’s so aggravating to hear that things are getting better - when it’s not the situation up in the Fairfield County area. Anything that is in our comfort range is a short sale and everyone we talked to, including our realtor, says to stay away from them. So to me Housing Is a HUGE issue to me. Might be great looking at national numbers, but why doesn’t anyone talk about area based numbers.
Thank you for your response.
I am looking into selling my house soon, because I am tired of having a mortgage, and I do not want to HAVE to make a mortgage payment. I will live with family until I can pay for a house in cash. Is this a good idea right now, or should I wait until house prices start increasing to sell my house?