Pending Home Sales: November 2008

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for November showing a 5.3% year-over-year decline in pending home sales nationally firmly indicating that the widespread collapse of consumer confidence that resulted from the economic turmoil experienced in September thru November has worked to drive home sales back into a sustained decline.

It’s important to note that sales in the West region have deteriorated significantly since September falling another 2.4% on a month-to-month basis likely as a result of investors pulling back on purchases of foreclosed homes as it has become increasingly obvious that a bottom has not yet been reached in those markets and that prices are, in fact, headed lower.

As usual, NAR Senior Economist Laurence Yun continues his government bailout groveling while dishing up a whopping portion of self-interested spin suggesting that 2009 may bring a 10% increase in home sales.

“With a proper real-estate focused stimulus measure, home sales could rise more than expected, by more than 10 percent to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country. Stable home prices will, in turn, lessen foreclosure pressures and lay the foundations for a solid economic recovery as the nation’s 75 million homeowners regain confidence,”

The following chart shows the national pending homes sales index since 2005 compared monthly. Notice that each year, the months value is decreasing fairly 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 November’s seasonally adjusted pending home sales results and draw your own conclusion:

• Nationally the index declines 5.3% as compared to November 2007.
• The Northeast region declined 14.6% as compared to November 2007.
• The Midwest region declined 10.1% as compared to November 2007.
• The South region declined 12.7% as compared to November 2007.
• The West region increased 19.3% as compared to November 2007.