Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for June showing another notable drop with the seasonally adjusted national index declining 2.6% since May and 18.6% since June 2009 as the expiration of the governments housing tax gimmick worked to damage future selling activity.
It's fairly clear from these results that one of the untended consequence of the government's intrusion into the housing market has been to shift home sales from the future into the period preceding the tax gimmick expiration leaving the future with less potential demand.
It's important to note that with the government's tax scam now complete and little chance for similar meddling for the foreseeable future, the weaker "organic" trends have likely taken over.
Meanwhile, the NARs chief economist Lawrence Yun suggests that since home prices are now fundamentally "justifiable", there will likely be no additional "meaningful" declines in national home prices.
"There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve, ... Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices."
Yun is now relying on "national" home prices, hoping that the all the individual markets net out to a flat price line yet there will likely be some sort of national price decline as a direct result of the tax credit expiration.
Whether the "organic" trend that emerges after the stimulated sales have cleared remains weak, flat or in decline we will have to wait to discern.
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).