New Pending Home Sales Index Released - Cheer, Spin Or Real Improvement?
What can I say, but it's that time of the month again, time for us to review the Pending Home Sales Index from the National Association of REALTORS®.
Historically, this housing report has been a measurement compiled by NAR and then used to proclaim the housing market "stronger than ever," but I suspect the public might be on to the cheer leading efforts of Dr. Yun.
The Pending Home Sales Index is a forward-looking report, as it measures the number of contracts in the MLS, not actual real estate closings. But we know that future sales will likely be a subset of those current contracts.
Based upon what they are seeing at the national level (click here to view the US Pending Home Sales Index), the 2012 has started off so well that Lawrence Yun, Chief Economist for NAR, has reported that 2012 is the first year of the recovery.
Pending Home Sales Index Video
If you watch the video (below) that was included with this month's Pending Home Sales Index, you will find a less than thorough examination of the existing inventory of homes for sale, as well as the shadow inventory of homes.
See how Dr. Yun (in video, looks surprisingly similar to cheer leader above) is able to form his conclusion, based upon some of the facts, to make us confident that the housing market bottom is behind us...
Pending Home Sales Index Summary
While I would love to see the NAR move to a more modern methodology for the monthly Pending Home Sales Index, there are two larger issues I would love to see addressed by Dr. Yun. His staff is uniquely capable of addressing these at the national level, and I believe we need it now more than we need a 6th straight year of cheer leading.
First, in regards to shadow inventory, what about the homes that "tried to sell and failed" in the past? In Tallahassee, we have roughly 7,000 homes that once tried to sell since the peak of the market, but have not yet sold (and are not currently listed for sale). Shouldn't these be counted among the shadow inventory?
In case you don't memorize our housing numbers :), those 7,000 homes represent more than 2 years worth of sales in the Tallahassee MLS.
Secondly, I wish he would address the growing number of Americans who live in a home that they cannot sell due to fallen prices that have made their home worth less than their mortgage. These "upside down" homeowners represent nearly fifty percent of our historical pool of homebuyers, so it's no shock the market is sputtering.... But I have not heard Dr. Yun or NAR address this growing problem.
The Pending Home Sales Index is a great way to anticipate the future of the housing market, but if we cover-up our findings, we have lost the complete value of the report.