Pending Home Sales Jump In April
Pending sales of U.S. homes jumped 6.7 percent from March to April, the biggest monthly jump in nearly eight years, the National Association of Realtors reported this morning.
Pending sales are up 3.2 percent compared to April 2008.
“Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” Lawrence Yun, the Realtors group's chief economist said in a statement. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The tendency here is to look at this data and think that the housing crisis is ending. But here at The Ticker, we take a cautious view of the housing recovery for a number of reasons:
a) The U.S. still has a big inventory of unsold houses -- about an 11-month supply. Until that number is sold or bulldozed down to about a six-month supply, there will be no lasting recovery.
b) Home sales now are being driven by low interest rates and massive price reductions. About 12 percent of all existing houses are either in foreclosure or otherwise in distress, and those houses are cheap. They get snapped up by investors and speculators, fueling pending home sales. The Realtors group's affordability index is in "record territory," the group said, proving the point.
c) The mortgage crisis is not over. Something like half of all reworked sub-prime mortgages have gone into default again.
So though the positive April pending home sales numbers are better than a poke in the eye with a sharp stick, by themselves, they're not a signal that the housing crisis is over.
June 2, 2009; 10:20 AM ET
Categories: The Ticker | Tags: National Association of Realtors, home sales
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