Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for December 2007 showing accelerating weakness to existing home sales activity and a clear continuation of the historic decline to residential housing on a year-over-year basis, both nationally and across every region.Continuing down the second slope of the pullback in demand for residential housing, ALL regions are now tracking at or below the lowest values ever recorded with the Northeast now registering over 30% fewer sales than in 2001, the first year Pending Home Sales were tracked.
As usual, NAR Senior Economist Laurence Yun makes another attempt at self interested spin and false optimism suggesting that home sales have been moving in a “narrow range” and promoting the idea that higher conforming loan limits will thwart the decline.
“Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas – that, in turn, would help to stimulate overall economic activity.”
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 December seasonally adjusted pending home sales results and draw your own conclusion:
- Nationally the index was down 24.2% as compared to December 2006.
- The Northeast region was down 26.0% as compared to December 2006.
- The Midwest region was down 17.3% as compared to December 2006.
- The South region was down 27.0% as compared to December 2006.
- The West region was down 24.1% as compared to December 2006.
