The pending home sales index for November was released by the National Association of Realtors (NAR) today, and our analysis suggests that December existing home sales may be worse than November’s.
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- 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 December existing home sales, this would be a 4.0% 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 the unadjusted data contracted year-over-year for the second month in a row.
The NAR reported November pending home sales index up 0.2% month-over-month and down 1.6% year-over-year. The market was expecting month-over-month growth of -0.9 % to 4.9 %(versus the growth of 0.2% reported). Econintersect‘s evaluation shows the index growth decelerated 1.2% month-over-month and down 4.0% 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:
The market is flattening. We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014. Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.
The market still favors buyers in most of the country, but higher mortgage interest rates in combination with strong price gains mean a more modest growth in values is expected in 2014..
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 31% of home sales in October according to the NAR), or in the following two months.
