by Mish

Major improvement can be expected for existing home sales in the March to April period based on February’s pending home sales index which jumped 5.5 percent to 112.3. This is well beyond the Econoday consensus which was already calling for a sizable 2.4 percent gain. This index tracks initial contract signings and though winter months are always volatile due to seasonality and related adjustments, today’s results will raise expectations for spring momentum in the housing sector.
Still, the year-on-year rate for this index, at only plus 2.6 percent, is a reminder that the resale market, though at its highs for the economic cycle, is still struggling. Regional data show special February strength in the Midwest, up 11.4 percent, followed by low-to-mid single digit gains across other regions.

Seasonal Adjustments In Play

With such wild swings every month, one has to question the accuracy of the seasonal adjustments. Then again, the weather has no exactly been following normal patterns.

RECOMMENDED ARTICLES

Warmest February in Decades

Mortgage News Daily reports Second Best Month in 11 Years for Pending Home Sales.

Pending home sales in February surprised everyone with an unexpected jump of 5.5 percent.  The National Association of Realtors® said its Pending Home Sales Index, which is a leading indicator based on signed home purchase contracts, rose to 112.3 in February from 106.4 in January.  The reading is 2.6 percent above a year earlier, and surpassed index readings for every month since May 2006 with the exception of last April.
Lackluster pending home sales in recent months have worried the housing industry, indicating that the spring market might be less successful than hoped.  Analysts had expected pending sales to recover from their 2.8 percent downturn in January, but they undershot the market in their estimates for February.  Those polled by Econoday had been looking for an increase ranging from 1.4 to 3.5 percent, with a consensus of 2.4 percent.
Lawrence Yun, NAR chief economist, says the level of contract activity in February is proof that, with spring on the doorstep, demand is rising “Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” he said. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.”
Added Yun, “Last month being the warmest February in decades also played a role in kick-starting prospective buyers’ house hunt.”

March could be interesting.

Mike “Mish” Shedlock

Pending Home Sales Unexpectedly Dive: NAR Blames Tight Supply

Fresh on the heels of a glowing existing homes sales report comes news of an unexpected plunge in pending home sales. Economists in the Econoday survey expected a 1.1% increase. Instead, the pending home sales index plunged 2.8%.

Pending Home Sales Down Again: NAR Blames “Staggering Lack of Inventory”

The pending home sales index for July dropped 0.8 percent vs an Econoday expected gain of 0.4%.

More Trapped Homeowners: Pending Home Sales Decline Again, Index Below 2016 Level

The pending home sales index, an estimate of existing home sales, has accurately provided the direction of the monthly home resale reports.

Pending Home Sales Plunge, GDP Delayed, Jobs on Time

Pending home sales in January plunged despite falling mortgage rates. The GDP report, due tomorrow will be delayed.

Existing Home Sales in February Wipe Out January Gains, Condo Sales Plunge: Is Low Inventory the Pro

The strong start to 2017 existing home sales faltered already. February wiped out the 3.3% gains in January, and then some. Econoday blames “inventory” as does Mortgage News Daily.

Existing Home Sales Unexpectedly Decline to 2017 Lows

On the heels of an unexpected decline in new home sales yesterday, comes news of an unexpected decline in existing home sales today.

NAR Blames Inventory, Weather as Pending Home Sales Tumble 3% Year-Over-Year

Pending home sales "inched" forward monthly but the year-over-year numbers show a sizable decline.

Existing Home Sales Best Since February 2007: Good as it Gets?

Existing home sales beat expectations with a climb to 5.71 million units, seasonally adjusted annualized (SAAR).

Retail Sales Rise 0.1% in February, January Revised

Retail sales rose the Econoday consensus of 0.1% in February, a weak reading. However, January was revised from a solid 0.4% to a strong 0.6%.