What Do the Pending Home Sale Numbers Mean? → Washingtons Blog
What Do the Pending Home Sale Numbers Mean? - Washingtons Blog

Tuesday, January 5, 2010

What Do the Pending Home Sale Numbers Mean?

The report released today by the National Association of Realtors (NAR) on pending home sales shows that housing is down:

Associated Press notes that the housing market may be headed for a "double-dip" downturn over the winter, and that the report "adds to worries industry is mostly propped up by government stimulus".

Remember that pending home sales figures are based on contracts which have been written, but have not yet closed. As NAR notes:
The Pending Home Sales Index [is] a forward-looking indicator based on contracts signed ...
NAR explains:
  • Our sample shows that over 80% of all pending home sales go to settlement within a 2-month time-period (and a significant share of the rest close in month 3 and month 4).
  • Not all pending home sales go to closing. A certain percentage of properties that go under contract are cancelled (or fallout) before ever going to settlement.
Given that the big banks have substantially tightened up on lending, it might be that less than 80% of the low number of current pending home sales will end up actually closing.

No wonder the New York Times wrote yesterday, even before the new pending home sales report was released:
When it comes, a lasting recovery will be evident in a housing rebound. Unfortunately, housing appears to be weakening anew ...

We wish we could proclaim a Happy New Year in housing. But until more is done to help struggling homeowners, the portents are not good.


  1. Helping struggling home owners is trying to close the barn dor after the horses have escaped. Plus, there is no fair way to do this unless we let all homeowners, struggling or not, access the same programs. And Zandy's suggestion that all taxpayers eat the principal writedowns on mortgages of struggling homeowners is very close to Communism.

    How about instead enacting programs that increases the standard of living of all Americans? Proactivity? Now there's an idea.

  2. The declining number of home sales is seriously disturbing for the real estate industry. It's something that should not be taken for granted as it would affect other business endeavors, thereby eventually affecting the economic condition of the country. All we need is the courage to face the economic downturn and try to get back on our feet.

    Home sales may also affect the mortgage industry. However, we should remain positive instead of allowing the tide of time kill the chances of improving the state of real estate and mortgage industry. That's why several Alberta home mortgage clients see to it that they understood the general processes of having a home mortgage arrangement in order to avoid financial setbacks in the long run. In Canada, Alberta home mortgages clients are trying to listen to the mortgage brokers assigned to them for immediate and dependable guidance.

    Thanks for the interesting post about home sales! I've noted down the graph that you posted.


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