Wednesday, November 01, 2006

Lereah: “A Little Lower Than Expected”

Today, the National Association of Realtors released its September “Pending Home Sales” report which showed that nationally, pending home sales had declined -1.1% as compared to August.

The National Association of Realtors developed the “Pending Home Sales” index as a leading indicator based on a random sampling of roughly 20% of the month’s transactions for exiting home sales and indexed to the average level of contract activity set during 2001.

In typical fashion, David Lereah, Chief Economist of the National Association of Realtors attempted to spin the data to a more positive outlook while presenting yet another version of the now fatigued “buyers are on the sidelines” analysis. “The present level of home sales is relatively high in historic terms,” adding “The market currently is a little lower than expected as buyers try to time their entry. In the meantime, there’s some buildup in demand that will move when consumers realize that conditions are optimal for them.”

As usual, looking more closely at the results one might draw a less optimistic conclusion:

  • Nationally the index was down 13.6% as compared to September 2005
  • The Northeast region was down 15.9% as compared to September 2005. Additionally, August marks the fourth consecutive month that this region has registered activity BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.
  • The West region was down 15.2% as compared to September 2005.
  • The Midwest region was down a whopping 18.4% as compared to September 2005. Additionally, August marks the third consecutive month that this region has registered activity BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.
  • The South region was down 9.0% as compared to September 2005.
So it appears that, year over year, contract activity is dropping rather sharply with the All regions now showing significant declines.

So much for pending contracts pointing to further “market stabilization”.

Posted by at