Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for October 2007 showing yet again a truly stark continuation of the historic decline to residential housing on a year-over-year basis, both nationally and in every region.Continuing down the second slope of the pullback in residential housing demand, the Northeast, Midwest, West and the National regions having now fallen over 20% BELOW the seasonally adjusted home sales activity recorded in 2001, the first year Pending Home Sales were tracked.
As usual, NAR Senior Economist Laurence Yun takes another crack at spin and false optimism suggesting that the mortgage market conditions have now improved.
“The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming, … Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”
I suppose that somebody needs to remind Yun that the mortgage situation has not exactly “improved” since August and by all accounts is precisely the reason why we are continuing to see double-digit declines in home sales activity coming “on the back” of last year’s double-digit declines.
The following chart shows the national Pending Homes Sales Index since 2005 compared monthly. Notice that each year, the months value is decreasing consistently (click for larger version).
The following chart shows the year-over-year changes to the national Pending Home Sales index as well as comparing the latest results against the values seen in the peak year of 2005 (click for larger version).
Note that in the above charts, I had to use the Not Seasonally Adjusted (NSA) data series as NAR changed the methodology for their Seasonally Adjusted (SA) series a while back and never republished the numbers. This is why none of the data appears to be breaking below a value of 100 because it’s the SA series that is now below 100.Keep in mind the current pending sales decline comes ON TOP of last years historic fall-off so the continued weakness is a sure sign that the decline is not ephemeral.
Look at the October seasonally adjusted pending home sales results and draw your own conclusion:
- Nationally the index was down 18.4% as compared to October 2006.
- The Northeast region was down 11.1% as compared to October 2006.
- The West region was down 16.9% as compared to October 2006.
- The Midwest region was down 11.7% as compared to October 2006.
- The South region was down 25.3% as compared to October 2006.
