A description of the pending home sale
Pending sales are contracts where the deal has not closed. They are a leading indicator of future existing home sales.
In this case, the expected home sales for November anticipate closings that will occur in December or January.
Note that existing home sales are reported at closing, while new home sales are recorded at signing.
Expected home sales fell 4.0% in November
National Association of Realtors reports November home sales expected to fall 4.0%
According to the National Association of Realtors, pending home sales fell for the sixth straight month in November.®. All four US regions saw a month-over-month decrease, and all four regions saw a year-over-year decline in deals.
“Pending home sales posted their second-lowest monthly rate in 20 years as interest rates, which have risen this year at one of the fastest rates on record, have sharply reduced the number of home-buying contracts,” said Lawrence, NAR’s chief economist. Yun. “The decline in home sales and construction has hurt broader economic activity.”
The Pending Home Sales Index (PHSI), a forward-looking measure of home sales based on contract signings, fell 4.0% to 73.9 in November. Pending transactions decreased by 37.8% year-on-year. The index of 100 is equal to the level of contractual activity in 2001.
Pending home sales in the United States in November 2022 fell 37.80 percent year-over-year. That’s the 18th consecutive month of year-over-year declines.
NAR will report existing home sales on December 20, 2023. Don’t expect the report to be good.
Inevitable return.
Nar’s chief economist (cheerleader) commented “With mortgage rates falling during December, home buying activity should inevitably pick up in the coming months and help economic growth.“
Eventually, there will be a return, but not based on interest rates in the coming months.
30 year mortgage rates
30-year mortgage rates by Mortgage News Daily, notes by Misch
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Existing home sales fall another 7.7 percent in 10th month
On December 21st, I noted that the existing decline in home sales in the 10th month fell another 7.7 percent.
Existing home sales have collapsed since February, when interest rates hit 4 percent. Today, the index is down 6.5 percent from a high of 7.2 percent.
That’s not enough to revive the housing market until prices crash. For now, prices remain stubbornly high.
Home prices are falling in every major market, how about year over year?
On December 27th, I mentioned that home prices were falling in every major market, but what about year-over-year?
The top is in, but the declines are still not making up for the huge rise in interest rates.
What about credit?
In case you missed it, please see my discussion of money supply and credit in Is Inflation Always and Everywhere a Monetary Phenomenon?
This post originated on MishTalk.Com.
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