US pending home sales index falls 12.2%
WASHINGTON (MarketWatch) - The U.S. housing market showed signs of major disruption in July, with a 12.2% monthly decline in contract signings on existing homes -- the largest drop since the pending homes sales index started in 2001, the National Association of Realtors reported Wednesday.
The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.
"This is disastrous," said Ian Shepherdson, chief U.S. economist with High Frequency Economics Ltd., in a statement. July's plunge indicates that June's rebound was a "fluke," he said. The index had gained 5% in June.
"Note that this collapse in pending home sales predates the turmoil in the markets and the subsequent jump in jumbo mortgage rates, even for prime borrowers," Shepherdson said.
Decreases in pending home sales were seen in all four major regions of the U.S., according to NAR. In July, pending sales fell 13.1% in the Midwest, 6.6% in the South, 20.8% in the West and 12.2% in the Northeast.
Other data have shown that the housing market has continued to weaken throughout the summer. Inventories of unsold single-family homes have been high, while prices have fallen. In July, inventories were at their highest level in 16 years. See full story.
The future is uncertain with abnormal factors clouding the horizon, said Lawrence Yun, NAR senior economist, in a statement.
"It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment," he said.
Yun added that the problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers.
House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. See full story. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible.
A sale is considered "pending" when the contract is signed. The NAR marks it as "sold" when the sale closes, usually within two months. The pending home sales data are volatile and have not "given any reliable leading information," said Stephen Gallagher, U.S. economist for Societe Generale.
The NAR will report on existing sales for August on Sept. 25. In July, the annualized sales rate fell to a five-year low of 5.75 million.
http://www.marketwatch.com/news/story/july-pending-home-sales-index/story.aspx?guid=%7B0C7A07E0%2DD437%2D4B42%2D8FE2%2D45570D5F1145%7D
The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.
"This is disastrous," said Ian Shepherdson, chief U.S. economist with High Frequency Economics Ltd., in a statement. July's plunge indicates that June's rebound was a "fluke," he said. The index had gained 5% in June.
"Note that this collapse in pending home sales predates the turmoil in the markets and the subsequent jump in jumbo mortgage rates, even for prime borrowers," Shepherdson said.
Decreases in pending home sales were seen in all four major regions of the U.S., according to NAR. In July, pending sales fell 13.1% in the Midwest, 6.6% in the South, 20.8% in the West and 12.2% in the Northeast.
Other data have shown that the housing market has continued to weaken throughout the summer. Inventories of unsold single-family homes have been high, while prices have fallen. In July, inventories were at their highest level in 16 years. See full story.
The future is uncertain with abnormal factors clouding the horizon, said Lawrence Yun, NAR senior economist, in a statement.
"It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment," he said.
Yun added that the problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers.
House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. See full story. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible.
A sale is considered "pending" when the contract is signed. The NAR marks it as "sold" when the sale closes, usually within two months. The pending home sales data are volatile and have not "given any reliable leading information," said Stephen Gallagher, U.S. economist for Societe Generale.
The NAR will report on existing sales for August on Sept. 25. In July, the annualized sales rate fell to a five-year low of 5.75 million.
http://www.marketwatch.com/news/story/july-pending-home-sales-index/story.aspx?guid=%7B0C7A07E0%2DD437%2D4B42%2D8FE2%2D45570D5F1145%7D