Pending Home Sales Plunge At Fastest Pace Since April 2011

Tyler Durden's picture

For the 5th month in a row, pending home sales missed expectations (though a silver lining is a positive print MoM - breaking a 5-month streak). Year-over-year, home sales collapsed at 4% - its worst drop since April 2011, and that even after prior data was revised lower. Still, despite this ongoing plunge, there is always hope - as engendered by NAR's chief economist who states (somewhat unconfidently), "we may have reached a cyclical low." Cylical low indeed - just don't look at the chart.

Sure doesn't look like a cyclical low...


as data misses for the 5th month in a row...


There is always hope... (via NAR)

Lawrence Yun, NAR chief economist, said the market is flattening. “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,” he said. “Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”


Total existing-home sales this year are expected to reach 5.1 million, a gain of almost 10 percent over 2012, but should stay at that level in 2014, and then rise to 5.3 million in 2015. The national median existing-home price for all of this year will be close to $197,300, up nearly 12 percent from 2012, but is projected to rise at a more moderate pace of 5 to 5.5 percent in 2014, and grow another 4 percent in 2015.

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HelluvaEngineer's picture

Lots of moonscapes being created on the North side of Atlanta. Those savvy builders must know something these charts don't.

Bullish for PVC farms!

PartysOver's picture

More than a few.  Doesn't look promising for future house pricing.

But then again most builders are building with other peoples money so what the hell.

DoChenRollingBearing's picture



PartysOver, I like that moniker!  :)

Barron's over the weekend says that housing may go up 5% per year (for the next three years).  Seems very optimistic...

I gave up prediction, but here are Bearing Guy's thoughts:

"Thinking ABout 2014"

mumbo_jumbo's picture

so i guess housing getting 5% less affordable for the next 3 years is good......for someone but certainly not me.

BTW haven't we seen this movie before? the script sure seems to be the same verbiage


mumbo_jumbo's picture


CrashisOptimistic's picture

Those are apartments or townhouse complexes.  Not single family homes.



CheapBastard's picture

Luckily, "house prices never drop."

ptoemmes's picture

HopeDozers and BackHopes.  

666's picture

Methinks Lawrence Yun's IQ has reached a cyclical low.

Cursive's picture

Congratulations to the all-cash "inwestors" who bought at the top of the market.  There's gonna be a lot more riders on the open borders bandwagon....

yogibear's picture

Blackstone,  enjoy your Sh#t sandwhich. 

The fun starts when they realize it.

markar's picture

Watch Blackstone wiggle out of this with a govt sponsored "rent to own" scheme. No money down, subprime mortgages for all. Wash, rinse, repeat.

Handful of Dust's picture

Outside of Cali [where foreigners are propping up the market] prices have not recovered in many areas. my friend bought a house for $780k and that whole area is now selling for less then $400k. It's sad esp if he is forced to move to another job across the country or overseas and has to sell...Huge Loss.

disabledvet's picture

Florida too...especially Miami. Having said that there are limits to cash too. I really don't think a house should be seen as an asset actually. Second lien mortgages should be banned in my view.

Obchelli's picture

Bullish - reversed Taper is comming

NoDebt's picture

Now is the best time to buy a home.  Now is the best time to buy a home.  Now is the best time to buy a home.

And just like that.... bing!  We're in Kansas again where everything is OK.

Rubbish's picture

Walmart jobs for the win.

MachoMan's picture

Ye jest, but at some point wouldn't it be a good idea to load up on dollar denominated debt?  Obviously there will be an opportunity cost given there may be other investment vehicles that appreciate more quickly in a dollar devaluation scenario, but isn't the real risk more that there may be a prolonged downturn or even dollar strength for a period longer than one can stand, where debt loads create savings margin compression into a net negative cash flow?

MFLTucson's picture

Should be positive for stocks!

cnmcdee's picture

We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,”

What a lying quote.  Newspeak for f*ck y*u all your base are belong to us.


My co-wrker's friend is a utility worker in Calgary.  She is apparently unhooking 1000's of meters of vacant and empty houses.  Canada never even came close to experiencing the pricing contraction in housing that the United States did.  Now is a good time to SELL before the dam cracks.  Anyways under Canadian law - the banks that are sitting on this glut of housing inventory have no requirement to tell anyone that it is a repossession sale. In otherwords the fact that this shadow inventory is not public is the only reason that housing pricing does not collapse in regions in Canada.


And to the federal reserve's plan to give money to the banks via bond's and T-Bill purchases and the banks are making money by simply parking it and not even investing it into the economy - they are committing a criminal fraud against the public.


gdogus erectus's picture

Is it possible that the plan is to never put these homes back on the market to turn us into a country of renters? Drive the prices higher to keep people from affording homes? Kinda like every other market in this system: Rigged. Until it isn't.

W74's picture

Neo-Feudalism and you can't call it anything else.  The only difference is that you work somewhere off the plantation and instead of pitching over 10% of your crops you get to fork over 30-40% of your take home pay to your neo feudal landlord, aka Lord o'er zee Land!


disabledvet's picture

Not a very good plan if it is. Sell the houses for a dollar...and tax the property on the basis of that valuation. At least you can still call it an asset.

PT's picture

gdogus erectus:  Your land is being stolen from you.  Everything else is smoke and mirrors.

Dr. Engali's picture

Old Yeller better start cranking up the presses right away and suppress those rates.

disabledvet's picture

I think that's exactly what she's going to do and she will do it by not only winding down all of QE but "globbing off" various parts of the three trillion on the Fed's three trillion balance sheet through reverse repo's. In effect "now it's your turn to go long the market and win." This is in fact happening...and if this continues there is nothing DC can do about it. Ironically his will SUPPORT DC's tax base. In that sense it is a "workable solution."

papaswamp's picture

What reports of increasing household formation is this guy reading. Household formation is declining because employment opportunities are declining. Someone bitch slap this guy...

W74's picture

My household de-formed as income and opportunities decreased.  I should've remained one of the Empire's stormtroopers dodging IEDs on behalf of Israel.

Colonel Klink's picture

Now is the BEST time to buy.  Real Estate may cool a bit but values should rise - Bernanke.

/sarc while choking down my vomit.

bozzy's picture

Just makin' some wiggle room under cover of the festivities for future adjustables.....

Yancey Ward's picture

We need the Fed to engineer lower interest rates.

NEOSERF's picture

Heard 10 of the nation's top 50 housing markets have surpassed 2007 highs....uhmmm, I'm not good at math but that is to guess where the other 80% is going, heading into higher mortgages?

katchum's picture

Pending home sales will get worse as mortgage rates go up, mortgage applications go down.

Lewshine's picture

"Pending home sales will get worse as mortgage rates go up, mortgage applications go down."


Truth is what they make it:  CNBC and The Fed, along with NAR can bullshit their way out of ANY negative data...Remember, for the last 10 years it's not about what it is - It's about what they say it is as Ben adds liquidity - PROBLEM SOLVED!

Seasmoke's picture

Who cares if he is wrong, when there are no consequences for ever being wrong. 

yogibear's picture

More layoffs, retirements and downsizing on the way.

It's about demographics. The Fed's plan eventually blows up in their face.

swmnguy's picture

Over the long run, the housing market doesn't work unless the median house costs around 2.5x - 3x the median income.  In the past we used wages from a job, but now we've devalued wages so much we have to use household income, but the equation still more or less works.  At historic interest rates, with a 30-year conventional mortgage, you can afford to buy a house that costs about 3x your annual income, and no more.

So what's the median household income in the US?  About $49,000?  So the median house price should be between $122,500 - $147,000.  A brief Google search shows the NAR trumpeting a national median sale price in August of about $200,000.  So around 4x median income.  And that's a national average, which means it doesn't take into account regional differences, which make all the difference.

The point is, house prices have to fall between 30% - 40% before most people can make the payments on a conventional loan to buy them.  The only reason prices are as high as they are is that institutional investors are buying them, subsidized by the government in a number of ways, and people have been getting phony mortgages they're never going to pay off.

How much of a "wealth effect" do people feel when their house is worth 40% less?  There goes all the meaningful "wealth" most Americans have.  If you bought your house in the past 14 years, odds are you're really underwater, whether you know it or not.

Colonel Klink's picture

I thought I saw a ZH article that Bernanke has pushed the ratio to 6.x, which was even higher than Greedscam did.  Either way, I agree that house values need to drop by close to half.  Which I patiently await...

j0nx's picture

Try living in the DC area. You have two choices here. Both parents either work and make at least $80k each so they can buy a house in a decent neighborhood with good schools or you buy a nicer house for cheaper in Prince William and live with the section 8 losers and illegal aliens and all the problems that come along with that. It has now become impossible for anyone making less than $150k a year to buy a somewhat nice SFH in Fairfax County and I'm not talking about anything special either. A 2000 SQ ft 30 year old home that needs substantial work and has 1/8-1/4 acre will run you at least $550k in the good parts of Fairfax County. And the price goes up quickly from there. Who the fuck can afford that shit? Especially if you have kids. Salaries here do not justify these prices any longer. Not even close.

Colonel Klink's picture

Having spent 15 years in that whole area, I can attest to this truth.  I left 10 years ago and would never return to the shithole which is known as the District of Crime metro area.

But the 1%'er which are the politicans and their Psychophants (sic), are doing just fine being paid with your money or corporate largess.

Richard Chesler's picture

I thought only crooks and flaming homosexuals lived in the DC area?

Colonel Klink's picture

Often one in the same.  The flamingest one just retired a short while ago.  Barney Fluff I think was his name.  Fluffer for the banks now I believe and a MSM contributor.

EDIT:  FYI I left the area since I didn't fit into either category. ;)  You chucklehead!

W74's picture

Parts of Southeast DC look little different than Kinshasa.  Same population too, with now-crumbling infrastructure left abandoned by a previous, more productive civilization.

jsgibson's picture

I hear you.  But remember the $550K SF homes in Fairfax were under $300K just over a decade ago.  Get a TH for roughly half the cost - doable even with younger kids and the wife can stay at home.  Wait a few years and I think you'll get a better deal on a SF.  Bernanke can't keep this bubble inflated much longer.  If we simply refuse to take on ridiculous debt the fiat ponzi scheme will collapse.

j0nx's picture

I will never EVER buy another attached home again. The neighborhood is always 3 or 4 section 8 rentals away from overcrowding, roaches, out of control kids, etc. It was frightening how quickly my old townhome development got taken over by illegals and section 8 renters. Lesson learned on that ordeal. Only a SFH for us or we remain renters until we can.