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| Positive Pending Home Sales Report Missing from Headlines |
| Written by Jonathan Smoke | |
| 08.08.2008 | |
Discuss this article on the forums. (0 posts)  I had a busy day yesterday so I didn’t have a chance to see the pending home sales report from the National Association of Realtors when it was released. The Wall Street Journal had the following on the front page of yesterday’s paper: “Headline: Pending Home Sales Seen Lower in June. The National Association of Realtors is expected to say that pending home sales fell in June but less steeply than in May.” As it turned out, the report was a positive surprise. I thought positive surprises were supposed to merit thoughtful news coverage. NAR reported that pending sales of existing homes increased at a seasonally adjusted annual rate of 5.3% in June. Did that make the front page of today’s Wall Street Journal? No. Instead the only mention was buried in a negative article on page A3 regarding initial jobless claims from last week. That article’s mention of the positive report stated: “Separately, the National Association of Realtors’ Pending Home Sales Index rose 5.3% to 89 in June from 84.5 in May. But economists said the nationwide rise in home sales that have been agreed to, but not closed, was likely caused by a glut of cheap, foreclosed homes for sale and isn’t a sign that the housing market has bottomed out. The index is off 12.3% from June 2007, when it stood at 101.4.
‘We doubt sales of nonforeclosed homes are rising, given the recent rise in mortgage rates and continued “price declines,”’ Ian Shepherdson of High Frequency Economics wrote in a note.” Where’s the empirical evidence to completely dismiss this report? If the rise is all from foreclosed homes, is that a bad thing that the market is working them off? Isn’t it possible that rising mortgage rates combined with prior home price declines are tempting would-be buyers to move before prices stop declining and mortgage rates inevitably get higher? Let’s look at this report for what it is—it is one data point, but it is clearly a positive one. If the trend continues in the July reading, it becomes even better. We are still down nationally over last year. But as the chart above shows, we are not down in the West. And all regions showed improvement in June over May. Let this be a lesson to everyone—don’t look for housing intelligence in the traditional financial press. Apparently if new information doesn’t fit the view of the market they want you to have, it gets buried or dismissed. 
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