Pending home sales, a leading indicator of existing home sales, rose 2.2 percent in November, but don’t get excited. 
Pending Home Sales Up 2.2% in November
The National Association of Realtors reports Pending Home Sales Moved Up 2.2% in November, Fourth Straight Month of Increases
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – advanced 2.2% to 79.0 in November. Year-over-year, pending transactions improved 6.9%. An index of 100 is equal to the level of contract activity in 2001.
“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said NAR Chief Economist Lawrence Yun. “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”
Pending Home Sales Regional Breakdown
The Northeast PHSI fell 1.3% from last month to 67.8, up 5.6% from November 2023. The Midwest index increased 0.4% to 78.1 in November, up 1.6% from the previous year.
The South PHSI improved 5.2% to 94.5 in November, up 8.5% from a year ago. The West index rose by 0.5% from the prior month to 64.3, up 11.8% from November 2023.
“It appears that some markets will outperform, driven primarily by local job gains and the flow of new inventory supply,” explained Yun.
Pending home sales will generally translate to existing home sales in one or two months.
The following chart assumes all of the sales will happen in December and the data won’t be revised.
It appears as if the bounce may be a normal seasonal thing and nothing to get excited about.
Let’s add some perspective with a long-term look.
Existing Home Sales Since 1968
Existing home sales are about where they were in January of 1994 and November of 1978.
Lawrence Yun says “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory.”
Closer inspection of the second shows sales have gone nowhere for two years.
We had a 3-month bounce at the beginning of 2022 and a bounce in 3 of 4 months at the start of 2024.
Perhaps this one keeps going but I am more than a bit skeptical.
Housing Boom-Bust
Housing has been in a boom bust cycle ever since the Fed launched its massive QE program.
And since the Fed started hiking housing transactions have crashed. There is no reason to believe what ails housing is now fixed.
An Update on the Fed’s Snail Pace QT Balance Sheet Reduction
On December 27, I gave An Update on the Fed’s Snail Pace QT Balance Sheet Reduction
Every month since April of 2022 the Fed has been slowly unwinding QE that it should not have done in the first place.
Two Recession Indicators, What Do They Say Now?
On December 20, I noted Two Recession Indicators, What Do They Say Now?
A pair of very reliable Indicators still suggest recession.
But will it be a stagflation recession with higher interest rates or will it be a deflationary recession?
How about no recession at all with Trump blasting inflation higher until the Fed acts to force one?
All of the above are possible outcomes.
This makes perfect sense in consideration of credit cards failing. (Sarcasm) Bifurcated economy. Top doing great. Bottom going broke. What is left of the middle falling down like leaves on an oak tree in the Fall. The only thing propping this up is the unrepentant federal credit card. Did you see deficit spending last quarter? With many trillions of old and new fed paper to sell next quarter? The jig might be up at last.
People know whether or not they want to buy a house in just 27 minutes, but it takes 88 minutes to decide on a couch. (“How long does it take to buy a house?“)
This was my experience just in the last 4 months, BUT the premise of the article is totally flawed.
Try including in the calculation of “deciding” time the search parameters people came up with (square footage, school district, tax district, basement, acreage, etc.) that resulted in that house coming up in their search as well as any additional research people might have done (i.e., looking at property disclosures) and getting pre-approved for a mortgage (as applicable) before calling their agent to look at the house, and it ain’t 27 minutes they spent “deciding” on a house. There was a lot of pre-screening prior to the actual showing that is not unlike the relationship between the tip of the iceberg (10%) that sits above water and the 90% that sits below the surface.
“How about no recession at all with Trump blasting inflation higher until the Fed acts to force one?”
Ed Dowd was just on USA Watchdog talking about how the influx of illegal aliens particularly over the last two years, as well as a recent surge of government jobs, helped keep the economy out of recession, in an effort to retain Biden/Harris in the White House. Reversing that would be a drag on the economy. Trump has already softened his stance on deportations and wants more military spending for “peace through strength.” Cutting regulations would also be a boost to business conditions. Trump certainly doesn’t want a recession to happen, so it seems anything is possible.
The USA is bankrupted, but there is no chapter in the bankrupcy code for Sovereign Nation. So, the currency is at risk, because it is either default on the debt or destroy the currency.
As I recall in the US anyway, States are sovereign, and can discharge debt. The US essentially went bankrupt several times, so it can do the same. Sure, it devalued the currency, but it wasn’t destroyed.
I thought you were an accountant?
US national assets are worth way more than the $36T in debt (not that we would want to sell the assets). So bankrupt, really?
OK, you win. Those assets, as stated on the balance sheet, exceed the liabilities, but they are not liquid and not available to pay debts.
We’ve entered a new bear market in bond prices. That won’t help housing prices.
Banks don’t lend deposits. Deposits are the result of lending/investing. While Dr. Philip George call this The Riddle of Money Finally Solved, Dr. Leland Pritchard said the same thing 20 years earlier but for different reasons.
As anyone who has applied double entry bookkeeping on a NATIONAL scale knows, the source of time/savings deposits is other bank deposits, dollar for dollar.
The doubling of DDs relative to TDs has increased the velocity of circulation. This is the opposite of Dr. Leland J. Pritchards posit:
Professor emeritus Leland James Pritchard (Ph.D., Chicago Economics 1933, M.S. Statistics, Phi Beta Kappa) never minced his words, and in May 1980 pontificated that:
“The Depository Institutions Monetary Control Act will have a pronounced effect in reducing money velocity”.
I wish we could get deflation. Where exactly?
My bet is deflationary recession. It’s never different this time.
I don’t see Trump pushing inflation higher. Biden & Carter learned the hard way inflation destroys your political future. Working class voters have no appetite for more inflation. Trump will get crushed in the 2026 mid terms if we get another inflation wave.
Trump can’t run in 2028 or ever again. Two term limit. He can be his own man.
No question prices have fallen in LA. By how much depends on which realtor wants to spin it their way. I’d say our neighborhood fell 10% off the highs.
Don’t look now, but did Henry Ford just come back from the grave to run the company and their X account?
Homes aren’t stonks. Takes a while to turn the Icon of the Seas.
Senator Bernie Sanders announces he will introduce legislation to cap credit card interest rates at 10%.
Probably he himself never paid interest on cc balances, which is an institutionalization of usury.
Would like to see stats about what percentage of accounts carry ongoing balances.
Very useful to know for social studies, and by some extension for history and anthropology.
I just checked out delusional Wolf and he spins it this way: “Buyers’ Strike Continues, Prices are still way too high”
For those not familiar, he has a delusion where he thinks there are millions of vacant houses waiting to go on the market. What explains the vacancies? People who sold their houses in the last several years but hung onto their old houses to ride the market up.
No rational person would hang onto a vacant house with no cash flow unless they didn’t need the money. If they don’t need the money it makes no sense to wait for the price to go up.
I have no doubt such cases exist. There might be thousands of them, but not millions, and not enough to explain the housing shortage.
In Connecticut and Massachusetts where I currently live, there are not enough housing units to go around for renters or buyers. Rents are through the roof and every house that goes on the market gets bought over asking. That’s reality.
There was a housing crash here back in 2022. Prices paused for 2 months and then the crash was over. Prices have been climbing ever since.
Flatish for a long time best case imo
Curious as to how you know that. Do you get real data from somewhere?
redfin & realtor have all sorts of data to check out local markets, as an example: https://www.realtor.com/realestateandhomes-search/Hartford-County_CT/overview
Pending sale is when the buyer plonked down a deposit, but everything is still in the air, like getting a mortgage. Right?
Most buyers have to be pre-qualified for a mortgage before the listing pends. That does not guarantee that they will actually get a mortgage. Also the buyer can back out even later in the process if there are inspection issues.
Sales the same as 46 years ago. Sounds swell
All part of the plan, my unpaid minion. You people aren’t supposed to own those, or anything else.
“You will own nothing and be happy. Or else.”
Except in the 70’s and 90’s that number was a peak, whereas this time, that number appears to be a trough. Housing prices will stay steady or fall a bit, until the buyers ability to afford it catches up. Then the number of transactions will begin to increase and the market will “normalize”.