The NAR's Pending Home Sales Report suggests the Spring buying season was a big flop.
Pending home sales decreased modestly in May and have now fallen on an annualized basis for the fifth straight month, according to the National Association of Realtors®. A larger decline in contract activity in the South offset gains in the Northeast, Midwest and West.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.5 percent to 105.9 in May from 106.4 in April.
Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. “Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” he said. “Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”
The lackluster spring, according to Yun, has primarily been a supply issue, and not one of weakening demand.
“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high,” added Yun.
Now that Spring is toast, the true test is supposedly Summer.
Note the lead-in graphic.
Allegedly, "an index above 100 coincides with a historically high level of homes sales activity."
Yet, pending sales are down year-over-year the 5th straight month.
Looking for more humor? I can help.
The Econoday consensus was for pending home sales to rise 0.6%.
Econoday Parrot Dead?
For at least a month, Econoday stopped commenting on any economic results. Econoday posts expectations and results, but it no longer comments on the results.
I miss the humorous comments from its trained parrot, typically about "hidden strength". The parrot was good for laughs at least three out of every four economic reports.It could find hidden strength in cooked spaghetti.
The Econoday parrot may be gone, but we still have Yun, the NAR's parrot.
Perhaps the parrot is ill or on vacation. If so, I send best wishes for a speedy recovery.
Existing Home Sales
On June 20, I reported Existing Home Sales Down Again: Yun Blames Inventory, a Symptom of the Problem
Heading into the report this is what Econoday had to say: " Existing home sales fell below Econoday's low estimate in April and a sizable bounce back is expected in May, to a consensus annualized rate of 5.500 million vs April's 5.460 million. Even with a better showing, resales have been stubborn and weak as April's year-on-year rate was in the minus column at negative 1.4 percent."
Spring is over. The pending sales report says the month of June will be another flop. Not to worry. Autumn may be the real "true test".
Mike "Mish" Shedlock