Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for July showing that the peak sales month for the year was, as usual, set in June and that starting with July’s 6.4% year-over-year decline, sales will likely trend down for the remainder of the year.As the decline in demand for residential housing slumps through its third year, it’s important to consider the significance of the extent of the decline.
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 and higher energy prices all working to depress buyer confidence thereby causing continued declines in housing demand.
As usual, NAR Senior Economist Laurence Yun continues his self-interested spin foolishly insinuating that sales will be flat for the long term and blaming Fannie and Freddie for the lack of buyer enthusiasm.
“Pending home sales are oscillating month-to-month, with the long-term trend essentially flat, … Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”
So much for the “momentum carrying into 2009” … Sorry Laurence… home sales will now decline through to December… but you knew that all along.
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 July’s seasonally adjusted pending home sales results and draw your own conclusion:
- Nationally the index was down 6.4% as compared to July 2007.
- The Northeast region was down 13.2% as compared to July 2007.
- The Midwest region was down 2.4% as compared to July 2007.
- The South region was down 13.4% as compared to July 2007.
- The West region was up 8.6% as compared to July 2007.
