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NAR Pending Home Sales Data Provides More Evidence of a Severe Housing Slump

National Association of Realtors data fits right in with homebuilder sentiment. A housing bust is underway.
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Listings and contracts from National Association of Realtors.

Listings and contracts from National Association of Realtors.

New home sales are recorded at signing, existing home sales at closing. Pending home sales are a preliminary look at existing home sales contracts.

The Bloomberg Econoday consensus estimate for the April Pending Home Sales index (May or later sales) is -1.5% in a range of -2.3% to 1.0%. 

None of them appear to be reading National Association of Realtors (NAR) reports. 

Please consider the NAR's Weekly Real Estate Monitor Residential and Commercial Markets May 16-19.

Weekly Monitor Key Points

  • Based on preliminary data, new contracts signed decreased 11.7% on a year-over-year basis while new pending listings increased 1.1%.
  • The inventory of pending listings (all contracts signed) was down 17.4% from one year ago, while the inventory of active listings fell at a lower rate of 4.2% from one year ago. 
  • There were 9 pending listings for every 10 active listings (10.4 one year ago)  
  • However, on average, homes are closing at a price slightly higher than the list price. The sale-to-list price ratio rose to 100.5% (99.4% one year ago).

Existing Home Sales 

Existing home sales courtesy of the NAR and Trading Economics

Existing home sales courtesy of the NAR and Trading Economics

One of the problems with year-over-year numbers is potential comparison to a very easy or difficult month.

Existing home sales in May of 2021 is a relatively easy comparison. 

Existing home sales courtesy of the NAR and Trading Economics

Existing home sales courtesy of the NAR and Trading Economics

Existing home sales in May of 2021 were 5,920,000 SAAR (seasonally adjusted annualized rate).

If May sales decline by 11.7% from a year ago, that would put sales at 5,227,000 SAAR representing a monthly decline of about 6.8%. 

If May sales decline by 17.4%, the inventory of pending listings (all contracts signed), May sales would be 4,914,000 SAAR representing a monthly decline of 12.4% 

The above calculations ignore seasonal factors. Since May normally a strong month, misses will be even bigger. 

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Expect a Sustained Housing Slump

At or near 5,000 would represent a sales drop to sales numbers seen in 2013. But prices sure won't be at the 2013 level.

Meanwhile, with mortgage rates at 5.4% to 5.7% a sustained housing sales slump is an easy call. 

Prices will come down, the pertinent question is "how fast?" 

One of my readers noted discounts in Austin.

Lennar Homes Austin, TX

  • April 26 - $10k home buyer incentives
  • May 10 - $15k home buyer incentives
  • May 17 - $30k home buyer incentives

Incentives always increase before prices decline. Price markdowns are coming and that will pressure existing home prices as well.

The NAHB Wells Fargo Home Builder's Index Is Sinking Spectacularly

In case you missed it, please see The NAHB Wells Fargo Home Builder's Index Is Sinking Spectacularly

The housing bust is just getting started. 

This post originated at MishTalk.Com.

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