Meanwhile, the NARs chief economist Lawrence Yun warns that the $8000 tax carrot may be clouding the waters:
"There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded, ... These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”
Where Yun is wrong, of course, is that the tax gimmick has not masked an underlying trend of "broad improvement"... its simply temporarily papered over a major declining trend in existing home sales that still has a long way to fall before it reaching a more fundemental level inline with both new home sales and "organic" existing home sales.
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).
Look at the seasonally adjusted pending home sales results:
- Nationally the index increased 10.9% as compared to December 2008.
- The Northeast region increased 14.9% as compared to December 2008.
- The Midwest region increased 8.7% as compared to December 2008.
- The South region increased 5.5% as compared to December 2008.
- The West region increased 18.6% as compared to December 2008.