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Pending Home Sales Drop -1.8% On Expectations Of A 3.0% Rise, Down Big From Prior Revised 4.4%

Tyler Durden's picture




 

The now forgotten foreclosuregate rears its ugly head once again, courtesy of reality. Will it also serve as a strawman for early rumblings of QE3? Sure enough, stocks jump on the bad news.

From the release:

The Pending Home Sales Index, a forward-looking indicator, slipped 1.8 percent to 80.9 based on contracts signed in September from an upwardly revised 82.4 in August. However, the index remains 24.9 percent below a surge to 107.8 in September 2009 when first-time buyers were jumping into the market to take advantage of the initial deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

From NAR's Larry Yun:

"Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead,” he said. “Nonetheless, there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves. However, tight credit and appraisals coming in below a negotiated price continue to constrain the market.”

And some more:

Existing-home sales are forecast to gradually rise, with some occasional
dips along the way. “For 2011 we should see more than 5.1 million
existing-home sales, up from about 4.8 million this year. Housing starts
are expected to rise to 716,000 in 2011 from 598,000 this year,” Yun
said. “We’ve added 30 million people to the U.S. population over the
past 10 years, but sales are where they were in 2000, so there appears
to be a sizable pent-up demand that could come to the market once the
economy gathers momentum.”

What pent up demand? Zero Hedge presented an S&P opinion piece which showed that adding the shadow inventory backlog is 40 freaking months!!!

 

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Fri, 11/05/2010 - 12:39 | 702907 LeftCoastRefugee
LeftCoastRefugee's picture

ES should rally big on this news.

Fri, 11/05/2010 - 13:14 | 703024 whatsinaname
whatsinaname's picture

Yun's yoni needs to be yanked.

Fri, 11/05/2010 - 12:41 | 702912 EscapeKey
EscapeKey's picture

So, now that we're post-QE2 announcement, we're back to shrugging off bad news, and rallying on good?

Fri, 11/05/2010 - 13:31 | 703100 Boilermaker
Boilermaker's picture

I don't recall anytime recently when bad news wasn't not only shrugged off but used as a rallying cry.  Good news...I don't remember that at all.

Fri, 11/05/2010 - 12:44 | 702919 TheGreatPonzi
TheGreatPonzi's picture

The real estate market is like frozen. Nobody buys, and the inventory is incredibly saturated, but the sellers are too arrogant to lower their prices. They don't want to take a loss on their initial buy.

When they do lower their price, it's usually out of despair, and we see things like -15% or even -50% straight.

Fri, 11/05/2010 - 12:47 | 702932 bronzie
bronzie's picture

but Harry Wanker said the real estate market was getting better!

Fri, 11/05/2010 - 13:25 | 703067 Boilermaker
Boilermaker's picture

it is, the REITS are at 52 week highs and climbing 1%+ daily.  Overlay the IYR to the DOW or SPX.  It's amazing...or literally unbelievable.

Fri, 11/05/2010 - 12:54 | 702946 Thoreau
Thoreau's picture

That "pent-up" demand, for the average joe, is for a rented roof over ones head. The only players I know actually buying residential are the future slum lords of America.

Fri, 11/05/2010 - 12:56 | 702950 cougar_w
cougar_w's picture

Why sell your house unless it is paid for? The best way to get money from your house is not to sell it but to not pay your mortgage and pocket the payment as profits. Too bad for those that paid their mortgage down; you can now deflate into oblivion or else sell right now into this corroded housing market and take whatever you can get. Assuming you can find the title, and can then defend yourself against the inevitable buyer lawsuit.

Fri, 11/05/2010 - 13:41 | 703141 MachoMan
MachoMan's picture

I'm actually entertaining the idea of selling...  currently live in 1.5x salary w/ 75-80% ltv.  Thinking about taking the equity and down sizing into a 1x salary and having it paid off in ~3 years...  might rent too...  dunno.  Timing is a bitch. 

Fri, 11/05/2010 - 12:57 | 702955 LeftCoastRefugee
LeftCoastRefugee's picture

What is going on at least in California is buyers are hestitant to purchase foreclosure properties from banks due to possible litigation from the previous owner sueing for wrongful foreclosure. Can you imagine buying a property, moving your family, fixing the new place up and 6 months later the property is embroiled in litigation over who owns it.

Fri, 11/05/2010 - 13:05 | 702985 cougar_w
cougar_w's picture

Or worse still -- you buy the property and close the deal and before you can move in the foreclosed owners have broken in and setup house and are claiming they were unjustly removed. Not only do you have a lawsuit, you have a dangerous situation. With all the neighbors watching as a family of many years in the area is assaulted by cruel banks and their "greedy carpetbaggers".

Yeah, I could spin that all sorts of ways and I'm not even devious by nature.

Fri, 11/05/2010 - 13:45 | 703156 MachoMan
MachoMan's picture

More of a headache than a money issue really...  there will be a solvent party (the bank, at least through federal backstop) to recoup your improvements from...  we have a state statute that says any improvements made by a BFP have to be paid by whoever divests the BFP of ownership...  if the foreclosing party fucked up the foreclosure, then you can sue them...  doesn't matter if the previous owner is a turnip.  (also have title insurance, etc.)

 

Fri, 11/05/2010 - 14:29 | 703267 Eternal Student
Eternal Student's picture

Really? I have to respectfully disagree. I think it depends on what part of California you are in. From what I've seen, most people are just completely clueless about foreclosuregate,  and could care less about it. It's just a paperwork problem; party on, dude! Prices are still high in the SF Bay Area, and might be rising less slowly.

But in general, people don't seem to know or care.

And don't bother trying to tell them differently.

Fri, 11/05/2010 - 15:53 | 703478 Auberon Herbert
Auberon Herbert's picture

Agree. In the Bay Area, if a house is move-in ready and listed within range of recent comps it will sell within a couple weeks at or above the listed price. Bay Area Case-Shiller is up 21% since April 2009.

Fri, 11/05/2010 - 13:09 | 702984 plocequ1
plocequ1's picture

Home prices? What does that have to do with Goog, Appl and Amzn? Does Google and Apple sell houses? Rally on gents. Its all good. Cramer says so.

Fri, 11/05/2010 - 13:15 | 703033 Deep
Deep's picture

Really Cramer said so. Then in must be true.

 

LOL LOL

 

 

Fri, 11/05/2010 - 13:30 | 703095 plocequ1
plocequ1's picture

Shhh, He may be staring at you depending on which Ad pops up

Fri, 11/05/2010 - 13:08 | 702996 Sancho Ponzi
Sancho Ponzi's picture

'Pent Up Demand': Unemployed who have been forced to move in with relatives/friends and are now 'Pent Up' in their basement

Fri, 11/05/2010 - 13:15 | 703031 SheepDog-One
SheepDog-One's picture

LMAO one of the best posts ever!

Fri, 11/05/2010 - 13:18 | 703041 Careless Whisper
Fri, 11/05/2010 - 15:00 | 703345 NotApplicable
NotApplicable's picture

Wow, indeed.

I've been asking people for years who needs X million empty houses. Of course, the rational answer is nobody. But the correct, irrational answer is politicians, who not only need all of these houses, but also the MortgageGate itself, all in order to have yet another mandate to plunder further under the guise of a solution.

 

Fri, 11/05/2010 - 13:15 | 703028 SheepDog-One
SheepDog-One's picture

No problem at all! Plunge Protection Team summoned and battling hard against any further red market coloration.

Fri, 11/05/2010 - 13:21 | 703053 SheepDog-One
SheepDog-One's picture

Pent-up demand for Geithner and Bernankes head on a stick is way higher.

Fri, 11/05/2010 - 13:26 | 703073 Boilermaker
Boilermaker's picture

I see they shoved the REITS sky high prior to the announcement just to ward off any short interest.

You know, it's just massively outperforming the broader market....just for giggles.

Fri, 11/05/2010 - 13:27 | 703076 shushup
shushup's picture

pent up demand - what a joke.

 

Fri, 11/05/2010 - 13:27 | 703077 jtmo3
jtmo3's picture

IGNORE...buy stocks!

Fri, 11/05/2010 - 13:31 | 703098 Downtoolong
Downtoolong's picture

I’ve been trying to sell my condo in northern New Jersey. It’s a prime unit, within commuting distance of Manhattan. It’s been listed for over six months without one firm offer. I also put it up for rent last month and got a ton of interest and action (people have to live somewhere, somehow). I’m likely going to sign a 24 month rental contract next week. There is also still a possibility that one prospective buyer will go through with a lease/purchase contract based on seller financing that I offered her (I don’t have a mortgage on the unit).

 

In other words, now that I eliminated all bank and lender involvement in the deal, there’s a good chance I might get something done.   

Fri, 11/05/2010 - 13:33 | 703107 Kayman
Kayman's picture

The criminal skimmers are being rewarded with Benny bucks.  What a great country.

Greenspan and Bernanke are overseeing the final destruction of the American Middle Class.

It is divide and conquer, until the nation is spent. Inflation is running rampant while the Propaganda Minister tells us we are having deflation.

If the political Whores and the Criminal Bankers had put Trillions into rebuilding the base of America, we would be starting to see recovery. All that can be seen now, is a country collapsing from exponential debt.

Fri, 11/05/2010 - 13:52 | 703182 MachoMan
MachoMan's picture

The criminal skimmers are being rewarded with Benny bucks.  What a great country.

Temporarily...  before they're converted to hard assets, e.g. farms, gold, silver, bunkers, canned hamz, etc.

Fri, 11/05/2010 - 13:47 | 703168 chinaguy
chinaguy's picture

The FOMC is going to get much more hawkish in 2011 w/ 3 voting "doves" being replace by 3 voting "hawks"...Q3 is not a done deal.

Fri, 11/05/2010 - 13:56 | 703192 cougar_w
cougar_w's picture

Not to be contrary, but QE3 will be tied to economic and social conditions going into 2012 elections, and nothing more. Oh and guess what, the 2012 election season started yesterday. Meaning, QE3 is already baked into the cake. We've got a whole 2 years to suffer through this, but at no time need anyone wonder if QE3 is on the way. It is. Give it 9 months or maybe a year.

Fri, 11/05/2010 - 13:54 | 703189 Buttcathead
Buttcathead's picture

Hooray !  time to short more SRS.

Fri, 11/05/2010 - 14:12 | 703225 Freddie Krugerrand
Freddie Krugerrand's picture

"There appears to be a sizable pent-up demand."

__________________________

I'm sure that's a typo.  What Larry Yun most likely said was that there appears to be a sizable "tents-up" demand.  This makes sense because most of the good spots under the bridges have already been claimed.      

Fri, 11/05/2010 - 14:22 | 703252 SheepDog-One
SheepDog-One's picture

Tents UP!

Fri, 11/05/2010 - 15:13 | 703368 cougar_w
cougar_w's picture

Tits UP!

Queue KathyC .... cummon darlin' don't disappoint.

Fri, 11/05/2010 - 14:59 | 703342 Dadoomsayer
Dadoomsayer's picture

Everyone I know wants to buy foreclosed homes, but none of those are going through right now.  Basically stop foreclosure sales and you stop the housing market.

Fri, 11/05/2010 - 15:12 | 703363 benb
benb's picture

"Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead, Larry Yun:

Who’d this guy study under, Joseph Goebbels?

I’m sure there are rosier residential markets than California where I’m at but a lot of the realtors I know of are sitting around like the Maytag repair man from Dachau. The smart ones made big $ in the bubble, played it cool and are still sitting O.K. It’s not easy selling a buyer into a contract that will lose them money for as far as the eye can see. And a lot of the sellers don’t want to suck it up. There has been considerable action over the past 2 years of buying up the foreclosures and turning them into rentals… looks good on paper but not exactly confidence building with a real 30% unemployment out here. Nonetheless rents are very strong (for now) in core middle-class areas. Trying to minimize the foreclosure fiasco won’t cut it. I’ve heard the actual overhang is close to 80 months…who knows?

If you want to hear a pretty unusual interview on the machinations of  the foreclosure situation check out this six part YouTube interview with Randy Kelton on Alex Jones. (I think it really doesn’t get going into about four minutes in).

http://www.youtube.com/watch?v=lm_qmqwigyI&feature=related

Fri, 11/05/2010 - 15:25 | 703392 moofph
moofph's picture

..."pent up demand"? they sure do misrepresent the truth in order to desperately save their falling profits and guity asses. this definitely has fell under the mainstrem propaganda radar but it has not fallen under the "we are watching you guilty parties involved" radar. please, ZH, do not let this slip away into one of those missed-opportunities-of-what-could-have -been-if-we-weren't-so-apathetic-remember-when-stories.

Fri, 11/05/2010 - 15:26 | 703394 braveneweconomy
braveneweconomy's picture

At least there was an upward revisions last month. Nothing good in this report, just more of the same to justify QE3, etc.

Fri, 11/05/2010 - 15:29 | 703403 Problem Is
Problem Is's picture

"there appears to be a pent-up demand that eventually will be unleashed... (as) the labor market improves."

And retailers forecast a huge Christmas season based on improving labor markets and incomes... and other fables...

At Least We Know The Labor Market for Crack-Heads Is Improving...
Only a Crack-Head hitin' the pipe could think up and write up this shit...

Stop Crack NOW!

Fri, 11/05/2010 - 20:13 | 704077 Atomizer
Atomizer's picture

This will be printed off for my better half to read. She is pressuring me to buy a third home (cash purchase). Hopefully, this will buy me another 3-6 months of sound reasoning to hold off. Crosses my fingers.

Don't get me wrong, great deals out there, just don't want a cash value purchase to present an over valued investment.

After next housing market haircut. It's a green light for me

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Mon, 11/08/2010 - 10:58 | 707968 Grand Supercycle
Grand Supercycle's picture

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