The pending home sales index for February 2014 was released by the National Association of Realtors (NAR) today, and our analysis suggests that March 2014 existing home sales again may not be good.
- The current trends (using 3 month rolling averages) continues to show a growing deceleration in pending home sales (as well as actual existing home sales).
- Extrapolating the unadjusted data to project March 2014 existing home sales, this would be a 8.9% contraction year-over-year existing home sales.
- Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).
- After 28 months of year-over-year growth, pending home sales according to the unadjusted data contracted year-over-year for the fourth month in a row.
The NAR reported February 2014 pending home sales index was down 0.8% month-over-month and down 10.5% year-over-year. The market was expecting month-over-month growth of -2.1% to 3.0% (consensus -0.8%) versus the growth of -0.8% reported. Econintersect‘s evaluation shows the index growthdecelerated 0.9% month-over-month and down 10.2% year-over-year.
Unadjusted 3 Month Rolling Average of Year-over-Year Growth for Pending Home Sales (blue line) and Existing Home Sales (red line)
/images/z pending2.png
From Lawrence Yun , NAR chief economist:
The recent slowdown in home sales may be behind us, while home prices continue to rise. Contract signings for the past three months have been little changed, implying the market appears to be stabilizing. Moreover, buyer traffic information from our monthly Realtor® survey shows a modest turnaround, and some weather delayed transactions should close in the spring.
The National Association of Realtors (NAR) pending home sales index offers a window into predicting existing home sales. The actual home sale might appear in the month the contract was signed (cash buyers account for 35% of home sales in February according to the NAR – cash buyers can close quickly), or in the following two months.
