| October Pending Home Sales Decline Less Than Expected |
| Written by Jonathan Smoke | |
| 12.09.2008 | |
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Discuss this article on the forums. (0 posts) The National Association of Realtors reported the preliminary readings on October pending home sales today. Since the economic meltdown seemed to reach an apex in October, I was expecting a significant decline as the series had been displaying a positive trend this summer until September. The preliminary October number for the U.S. was down 0.7% to 88.9 from an upwardly revised reading of 89.5 in September. The year-over-year decline was only 1%. Lawrence Yun, NAR’s chief economist, seemed encouraged in his remarks about the new data: “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” he said. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Regionally the performance in October was quite varied. The Northeast recorded a modest 0.6% increase, but remains the most depressed region based on the index benchmark of the level of sales in 2001. A reading of 100 would be considered par with 2001, or a “historically high level of home sales activity.” The South recorded a 7.8% increase as that region slowly inches back towards 2001 sales levels. There is no doubt that foreclosures are a large part of the sales, especially in Florida and the West, but transactions are good and necessary to reduce supply. The Midwest declined 4.3% and remains significantly worse than last year and well below 2001 standards. The West recorded the biggest monthly decline of 8.7%, but even after that decline the West remains 17.4% above last year and still above 2001 benchmark levels. Overall, I think the sales data are encouraging. Even if a large portion of these sales are foreclosures or distressed sales, the inventories are moving. If any of the potential federal government actions come to fruition in early 2009, we may see a surge in sales as those who have put off buying for two to three years see a window to lock in low rates when prices are at or near a bottom. 
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