Pending Home Sales Drop in January, Still Up From 2009

Pending home sales data released

The National Association of Realtors released pending home sales data for January showing that contracts signed fell 7.6% from December but while some bloggers cry the sky is falling, it has to be noted that the numbers show a 12.3% increase in pending home sales over January 2009, so this particular economic indicator is healthier now than last year.

Lawrence Yun, NAR chief economist, said, “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February.”

Accordingly, abnormal swings are expected in housing indicators. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”

Peter Boockvar of The Big Picture Blog said, “Spring will see improvement as it always does and also due to the knowledge that the Fed’s purchases of MBS end as does the home buying tax credit, so pent up demand will be there. The real question though is what happens this summer into the fall when the government steroid shots wear off.”