Network News

X My Profile
View More Activity
2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

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.

-- Frank Ahrens
Sign up to get The Ticker on Twitter

By Frank Ahrens  |  June 2, 2009; 10:20 AM ET
Categories:  The Ticker  | Tags: National Association of Realtors, home sales  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Markets Open Flat After Gangbusters Monday
Next: May Auto Sales: Toyota Off 38%, GM Down 30%, Ford Off 21%

Comments

Thank you, Mr. Ahrens for not drinking the NAR koolaid.

Sales are up because the foreclosure moratoriums of late 2008 (mostly political) have ended and banks are clearing out the old merchandise at firesale prices to make way for the new.

Sadly, we have at least another year of severe pain to come.

Posted by: Clio1 | June 2, 2009 11:02 AM | Report abuse

What is the point of pending sales data? So many offers fall through these days, it is just a marketing tool. Put out the actual sales data or stop talking about it.

Posted by: accio | June 2, 2009 11:06 AM | Report abuse

What is the point of pending sales data? So many offers fall through these days, it is just a marketing tool. Put out the actual sales data or stop talking about it.

Posted by: accio | June 2, 2009 11:06 AM
=============

Man are you clueless. These numbers are a major indicator of trends in the real estate market. Clearly they are significant and should be talked about. Of course the Limbaugh "Operation Fail" Republicans don't want to hear about it.

Posted by: reality_chuck | June 2, 2009 11:30 AM | Report abuse

You can all crow as much as you like about sales. The simple fact is that the inventory of unsold homes says it all. Infact we forget to take into account the number of homes that are not actually put up for sale by the banks for fear that they would totally spook the market.

Posted by: psouleles | June 2, 2009 11:39 AM | Report abuse

A Person in the media that actually gets it!

Too bad they'll never give you space in print and/or TV. They don't like truth tellers.....

Posted by: 4thFloor | June 2, 2009 12:04 PM | Report abuse

What they mean is that sales of default loan homes that were stolen back by the banks are selling like candy.

The same banks and financial institutions (and realtors/brokers) that made a killing off of the housing boom are now making a killing off of selling the homes that expectedly went into default.

Posted by: maphound | June 2, 2009 12:29 PM | Report abuse

Re: accio

I am as suspect as anyone about any news that comes from NAR. But it appears that they are counting signed deals. The big hold up on short sales that is making so many deals fall through are due to the banks refusing to sign on. I may be wrong, but I don't think these distressed properties are being counted.

Posted by: mwandrews | June 2, 2009 12:31 PM | Report abuse

It's good to know that housing is not a drag on the economy anymore - can we please move on and let go of the subsidies ... the Federal Reserve's cheap supply of money at low interest rates and the funny tax credit to get more people into homes and move on with life - eureka, housing has been cured!

Posted by: free_np | June 2, 2009 2:01 PM | Report abuse

Do these sales figures include homes that were 'refinanced' due to the historically low interest rates? If this is the case, the overall sales are not as great as some would want us to believe!

Posted by: MadasHelinVA | June 2, 2009 2:09 PM | Report abuse

Do these sales figures include homes that were 'refinanced' due to the historically low interest rates? If this is the case, the overall sales are not as great as some would want us to believe!

Posted by: MadasHelinVA | June 2, 2009 2:10 PM | Report abuse

These NAR numbers are total BS. They are based on April contracts, which were signed back when 30 year mortgage rates were around 4.7% or so. Problem is, many of those contracts did not have their rates locked in for 30-60 days, and now many prospective homebuyers are discovering they can't get rates lower than 5.6% or worse. Higher rates, thanks to the Fed's absolute failure to hold down long-term interest rates, means many of those contracts won't be signed. My contacts in the industry are telling me that upwards of 50% or more of pending contracts are falling through due to higher rates and contingencies not getting done.

With previously-frozen foreclosures now going through, a huge glut in available housing, rising interest rates, rising numbers of new foreclosures thanks to unemployment, and another round of ARM and Option-ARM resets due late this year, we have a recipe for substantial price reductions and market dysfunction for well into 2010.

Posted by: Claudius2 | June 2, 2009 3:41 PM | Report abuse

Sorry, I meant to say 'many of those contracts won't be finalized.'

Posted by: Claudius2 | June 2, 2009 3:47 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company