The pending home sales index for January 2014 was released by the National Association of Realtors (NAR) today, and our analysis suggests that February 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 February 2014 existing home sales, this would be a 8.0% 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 theunadjusted data contracted year-over-year for the third month in a row.
The NAR reported January 2014 pending home sales index was up 0.1% month-over-month and down 9.0% year-over-year. The market was expecting month-over-month growth of -0.2 % to 0.0%(versus the growth of 0.1% reported). Econintersect‘s evaluation shows the index growth decelerated 0.3% month-over-month and down 9.1% 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)
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From Lawrence Yun , NAR chief economist:
Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping. Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn’t as favorable as it was a year ago.
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 33% of home sales in January according to the NAR – cash buyers can close quickly), or in the following two months.
