The National Association of Realtors (NAR) seasonally adjusted pending home sales index improved. Our analysis says pending home sales is in contraction year-over-year. The quote of the day from this NAR release:
Analyst Opinion of Pending Home Sales
The rolling averages are in negative territory. The data is very noisy and must be averaged to make sense of the situation. There is no signs of a surge in home sales, although the trends continue to be downward.
Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).
The NAR reported:
- Pending home sales index improved 0.4 % month-over-month and down 3.0 % year-over-year.
- The market [from Bloomberg / Econoday} was expecting month-over-month growth of 0.5 % to 1.8 % (consensus +1.0 %).
Econintersect‘s evaluation using unadjusted data:
- the index growth rate was up 0.3 % month-over-month and down 4.4 % year-over-year.
- The current trend (using 3 month rolling averages) is decelerating and in contraction.
- Extrapolating the pending home sales unadjusted data to project April 2018 existing home sales would be down 1.7 % year-over-year for existing home sales.
From Lawrence Yun, NAR chief economist:
…. contract activity is moving sideways and not breaking higher despite the strong job-creating economy. Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” he said. “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand1. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.
As anticipated, the multiple winter storms and unseasonably cold weather contributed to the decrease in contract signings in the Northeast.
Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,. That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers — especially first-time buyers — will be left on the sidelines.
Yun forecasts for existing-home sales in 2018 to be around 5.61 million — up from 5.51 million in 2017. The national median existing-home price is expected to increase around 4.4 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent.
