Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for September showing a notable decline with the seasonally adjusted national index dropping 1.8% since August and falling a whopping 24.9% below the level seen in September 2009.
On a non-seasonally adjusted basis, the national index plunged 15.2% since September falling 24.9% below the level seen in September 2009, 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 although foreclosure-gate will likely dampen sales over the next few months, pent-up demand is just waiting to be "unleashed" on the nation's housing markets.
"Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead, ... Nonetheless, there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves. However, tight credit and appraisals coming in below a negotiated price continue to constrain the market."
Yun is right on one count, one significant outcome of foreclosure-gate will likely be notably reduced home sales but going forward, Yun is likely too optimistic in suggesting that there is significant pent-up demand.
Housing is just not the preferred asset class for gambler/speculator/flippers types anymore so the "organic" trend going forward should reflect a more lackluster demand coming from basic household formation.
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).