Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for February showing a weakening 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.As the decline in demand for residential housing slumps through its third year, it’s important to consider the significance of both the extent of the decline and the severity of the oncoming declines to existing home sales activity clearly indicated by the current 21.4% year-over-year drop-off in pending home sales.
It is very likely that we are now seeing the spiraling feedback effect of sharply declining prices and both the palpable sense and actual effects of recession working to depress buyer confidence thereby causing continued even accelerating declines in housing demand.
As usual, NAR Senior Economist Laurence Yun continues his attempts at self interested spin and false optimism suggesting that home sales will rise “notably” by the second half of the year as a result of the new super jumbo GSE “conforming” loan limits.
“We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
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 national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 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.Look at February’s seasonally adjusted pending home sales results and draw your own conclusion:
- Nationally the index was down 21.4% as compared to February 2007.
- The Northeast region was down 25.4% as compared to February 2007.
- The Midwest region was down 17.4% as compared to February 2007.
- The South region was down 30.3% as compared to February 2007.
- The West region was down 17.1% as compared to February 2007.
