NAR released its PHSI today and there were no surprises. The expiration of the federal tax credit for first time buyers and existing home owners (signed contract by April 30, close by June 30) showed its impact on sales trends.
By the way, my above chart shows how ridiculous seasonal adjustments are – the non-seasonal adjusted line better reflects whats going on.
The pending sales data set is about 20% the size of existing homes and is comprised of existing single family and condo sales. Its dubbed a forward looking index but it really is a current looking index. The “meeting of the minds” between buyer and seller occurs just before contract signing. Its forward looking in the context of closing data but it is not forward looking on the condition of housing.
Consecutive M-O-M Gains
- Sales were up 6% from March to April and up 22% from April 09 to April 10. Last month
- Sales were up 7.9% from February to March and up 8.3% from March 09 to March 10.
Analysts have expressed fear the housing market will suffer with the end of the government subsidy. But the job market has been improving. The Labor Department is scheduled this week to release employment data for May, and economists surveyed by Dow Jones Newswires are expecting a gain of 515,000 non-farm payroll jobs.
The same thing happened last fall as the initial tax credit within the federal stimulus plan was set to expire on November 30 only to be renewed and expanded a few weeks later. No renewal this time.
Regionally things were not so consistent. Month over month gains in
- Northeast +29.5%
- Midwest +4.1%
- South -0.6%
- West +7.5%
Buyers they better close by June 30th. Not an automatic assumption in today’s mortgage environment.
Tags: Pending Home Sale Index, PHSI, NAR, National Association of Realtors
My opinion is that the graph will show a very dramatic adjustment when those May numbers come out. I’m thinking a “whiplash” as those May and June sales were pushed forward to meet that April deadline.
Now, if deals don’t close by June 30th and the sellers can not complete their move-up purchases then we will see double trouble.