Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for October showing a notable jump with the seasonally adjusted national index increasing 10.4% since September but falling a whopping 20.5% below the level seen in October 2009.
On a non-seasonally adjusted basis, the national index increased 9.2% since September but remained 22.4% below the level seen in October 2009, nearly the single largest annual decline on record for this cycle.
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.
Meanwhile, the NARs chief economist Lawrence Yun suggests that suggests that the "solid double-digit" gain is a welcome sign that the nation's housing markets are in a "recovery" phase while emphasizing the importance of returning to more "normal" underwriting standards.
"It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011 ... More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery"
It's important to note that what NAR believes is "normal" for underwriting standards is likely a far cry from what any truly prudent market participant or regulator might consider it to be.
Yun may long for a return to the bubble days of zero-down, no-doc, piggy-back and sub-prime but the markets likely cannot take anymore of that type of abusive punishment and speculation.
While more transactions are always better for the Realtor bottom line, the holders of the housing assets need only sensible, thorough and soundly underwritten transactions.
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).