Pending Home Sales: March 2017

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for March showing an notable decline in sales activity with the seasonally adjusted national index falling 0.8% from February but remaining 0.8% above the level seen in March 2016.

The following chart shows the seasonally adjusted 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).

NAR Against Tax Reform is Self Interest Over Common Sense

The National Association of Realtors nearly immediately met today's Trump administration tax reform policy announcement with outright rejection suggesting that the proposed changes were placing "home-ownership in the cross-hairs" and further suggested that the proposed tax changes would "nullify" the current tax benefits of owning a home.

It's important to note though that the primary issue that the NAR has taken with the proposal has only to do with how it may change the use of the mortgage interest deduction (and NOT the primary residence exclusion which the administration directly indicated was unaffected) which would only come as a result of the proposed increase in the standard deduction.

Since, under the Trump proposal, individuals and households would have a larger standard deduction (apparently 2x larger!) there would fewer tax filers itemizing their deductions (i.e. they would be taking the standard deduction in lieu of itemizing) and thus fewer caring about the tax "benefit" of taking on a mortgage.

So, while the presumed impact of the loss of this "benefit" has the NAR concerned about their private interest, common sense tells us that this is not a loss in any normal sense and further that taxpayers overall would be better off with a 2x increase in their standard deduction than the perverse incentive of taking on more housing debt.

UPDATE: Apparently the mortgage interest deduction is now NOT changing so NAR need not reject major tax reform only to protect their own self interest.

S&P Core Logic Case-Shiller: February 2017

Today's release of the S&P Core Logic Case-Shiller (CSI) home price indices for February reported that the non-seasonally adjusted National index increased from January with prices rising 0.24% while the non-seasonally adjusted Composite-10 city index increased 0.33% and the Composite-20 city index increased 0.42% over the same period.

On an annual basis, the National index increased 5.76% above the level seen in February 2016 while the Composite-10 city index increased 5.19% and the Composite-20 city index increased 5.85% over the same period.

On a peak basis, the non-seasonally adjusted National index just surpassed the record high level seen prior the onset of the great recession rising 0.24% above the level seen in 2006 while the Composite-10 index remained -8.41% below the peak level and the Composite-20 remained -6.31% below.

FHFA Monthly Home Prices: February 2017

Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in February, nationally, home prices increased 0.79% from January rising 6.43% above the level seen in February 2016.

The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

New Home Sales: March 2017

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for March showing an increase with sales rising 5.8% from February climbing 15.6% above the level seen in March 2016 but still remaining near an historically low level with 621K SAAR units.

The monthly supply declined to 5.2 months while the median selling price increased 1.19% and the average selling price increased by 5.58% from the year ago level.

The following chart show the extent of sales decline to date (click for full-larger version).