Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March 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 20.1% 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 the spin suggesting that his predictions of a weak first half of the year and an improved second half are coming to fruition as anticipated.
"Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas, … As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available."
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 March’s seasonally adjusted pending home sales results and draw your own conclusion:
- Nationally the index was down 20.1% as compared to March 2007.
- The Northeast region was down 15.4% as compared to March 2007.
- The Midwest region was down 22.3% as compared to March 2007.
- The South region was down 26.7% as compared to March 2007.
- The West region was down 9.5% as compared to March 2007.
