Pending Home Sales: NAR magically converts a negative 19.8% figure to positive 2.0%

Caution: You are about to read

Seasonally Adjusted (SA) Data

You are advised to wear protective eyeware

and do not look directly at the light

Washington, January 27, 2011

Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors®

The Pending Home Sales Index,* a forward-looking indicator, increased 2.0 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, credits good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.

“In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

Vigilant Grandpa on NAR's Real Figures

(a.k.a. Not Seasonally Adjusted)

The National Association of Realtors headline, seasonally adjusted December 2010 index number was 93.7 and 2% greater than November. The Not Seasonally Adjusted (NSA) Index was 60.9 or 35% less than the smoke and mirrors headline number. In addition, the December 2010 NAS figure decreased 19.8% from November.

By region, NAR reported an increase of 11.5% month over month for the SA South Region however the NSA figure was -7.5%. They reported a -13.2% reduction month over month when in fact the non pretend and non-manipulated figure was -34.3% month over month.

Lawrence Yun starting his Santa Claus impersonation in November when he reported a 91.9 SA pending home index while the NSA figure was 75.9 (17% less). This enabled the jolly one to report a 3% increase month over month while the Grinch, NSA figure was in fact -9.6 month over month.

Santa Claus' seasonally adjusted monthly figures indicate 3 consecutive months (Oct., Nov. & Dec. 2010) of increasing pending home sales when in fact the NSA figures show 3 consectutive months of declines!

Come on Santa, time to come clean as we never bought that entire "down the chimney" thing Either!

NAR attends DOL Seasonal Adjustment Seminar & Lobs out +3.5% Pending Home Sales Figure

Yippee, NAR lobs out a +3.5% Pending Home Sales (M-O-M) Figure to Please Wall Street. Lawrence Yun (the Stuart Smalley of the Real Estate Industry) announces a seasonally Pending Home Sales Index (PHSI) of 92.2 for November 2010. Lawrence neglected to mention the "not seasonally adjusted" PHSI reading of 76.2 down 9.3% from October 2010. For the month of November, the magic of seasonal adjustments added 16 points to the PHSI.

Yeah, yeah, there are months in which the not adjusted figure was greater than adjusted, however since November 2009, the seasonal adjustments added 21.2 points to the not adjusted. Head's likely rolled in April 2010 when the not adjusted figure was 22.5 points higher than adjusted (probably an intern error). NAR Chart: Adjusted and Not Adjusted

Washington, DC, December 30, 2010

Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of REALTORS®.

The Pending Home Sales Index,* a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained.

“All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.

New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.

Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent. NAR Press Release

September Pending Home Sales slips 1.8% from August and down 24.9% from Spetember 2009

National Association of Realtors
11/5/10

Pending home sales retreated after two monthly gains, signaling an uneven recovery entering 2011 with some near-term disruptions from the foreclosure moratorium, according to the National Association of Realtors®. The report was released here at the 2010 Realtors® Conference and Expo.

The Pending Home Sales Index,* a forward-looking indicator, slipped 1.8 percent to 80.9 based on contracts signed in September from an upwardly revised 82.4 in August. However, the index remains 24.9 percent below a surge to 107.8 in September 2009 when first-time buyers were jumping into the market to take advantage of the initial deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said there is a mix of factors in the housing market. “Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead,” he said. “Nonetheless, there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves. However, tight credit and appraisals coming in below a negotiated price continue to constrain the market.”

The PHSI in the Northeast slipped 1.7 percent to 59.6 in September and is 28.3 percent below a year ago. In the Midwest the index fell 5.7 percent in September to 64.2 and remains 33.0 percent below September 2009. Pending home sales in the South declined 3.5 percent to an index of 87.6 and are 19.1 percent below a year ago. In the West the index rose 3.5 percent to 104.6 but is 24.7 percent below September 2009.

In examining the underlying fundamentals, Yun expects the Gross Domestic Product to grow 2.0 to 2.5 percent over the next two years. With a projection of 1.5 million additional jobs over the next two years, the unemployment rate should decline to 8 percent by 2013 and return to a normal level of around 6 percent in 2015.

“Mortgage interest rates currently are bouncing along the bottom, but are expected to gradually rise and average 4.9 percent next year, then rise to 5.8 percent in 2012,” Yun said.

Existing-home sales are forecast to gradually rise, with some occasional dips along the way. “For 2011 we should see more than 5.1 million existing-home sales, up from about 4.8 million this year. Housing starts are expected to rise to 716,000 in 2011 from 598,000 this year,” Yun said. “We’ve added 30 million people to the U.S. population over the past 10 years, but sales are where they were in 2000, so there appears to be a sizable pent-up demand that could come to the market once the economy gathers momentum.”