Pending Home Sales Jump In May; Drop YoY For 8th Month In A Row

Tyler Durden's picture

Pending home sales surged by 6.1% MoM in May; this is the largest jump since April 2010 (when first-time buyers scrambled to sign contracts before tax credits expired. However, exuberant spike aside, this is the 8th month in a row of a year-over-year drop in home sales. NAR is ever-optimistic suggesting "sales should exceed an annual pace of five million homes," amid low rates, inventory and job creation (goldilocks?). The sales, unsurprisingly, are all high-end: "The flourishing stock market the last few years has propelled sales in the higher price brackets," as lower-cost home sales plunge.

 

 

Lawrence Yun, NAR chief economist, expects improving home sales in the second half of the year. “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” he said. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”

May’s 6.1 percent increase was the largest month-over-month gain since April 2010 (9.6 percent), when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended.

It's all high-end sales...

The flourishing stock market the last few years has propelled sales in the higher price brackets, while sales for homes under $250,000 are 10 percent behind last year’s pace. Meanwhile, apartment rents are expected to rise 8 percent cumulatively over the next two years because of tight availability,” said Yun. “Solid income growth and a slight easing in underwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable.”

What happens if stocks don't keep rising?

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MFL8240's picture

“Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,”

 

Great spin maybe this clown can tell the 93,000,000 Americans without work where the improved job CREATION is. As for the rates, there have been artificially held down with printed money and the Belgium connection Ponzi scheme!  No signs of any improvement when you have a NEGATIVE 2.9% growth in GDP.

ilion's picture

All retail Forex crowd was destroyed today as Armada Markets reported record short positions in EUR/USD and GBP/USD. I wonder if we'll go higher from here?

drchris's picture

Chicago PMI crash and pending home sales smash. I'm sure these are mostly cash sales on investment properties. 

This is the best part: "However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”  

Meaning contraction. 

Handful of Dust's picture

The key word here is "pending"....wait until the buyer backs out and the house 'falls out' into an ever expanding stagnant inventory and the builder struggles to dump them onto some sucker who can only affrord zero down or 2.50% down on his/her meager salary and become a Debt Slave for Life ('DSFL').

G-R-U-N-T's picture

Off topic but FYI....

 

"Court: Public union can't make nonmembers pay fees"

 

http://hosted.ap.org/dynamic/stories/U/US_SUPREME_COURT_UNION_FEES?SITE=...

 

 

NotApplicable's picture

I bet they'll still find another way to pull this off.

NoDebt's picture

I applied for a loan to become a "first time slum lord buyer" of a dilapidated apartment building.  Funny thing is, I did it at 4 different banks and pledged the same building to all four as collateral.

Oracle of Kypseli's picture

Four days after signing you will get caught. Then what? 

NoDebt's picture

They'll never catch me, Oracle.  I'm just too freakin' fast.  Besides, look at all the times it's been done elsewhere in the world- Spain, Italy, China, etc.  What makes you think I can't get away with this?

AccreditedEYE's picture

As you can clearly see, this is breaking the market out. Perhaps my gentle glide higher call for the summer is wrong and it will actually rip higher?

SheepDog-One's picture

At this point of the Feds' Zimbabwe style markets, they have to rip it higher or it tanks completely.

Ignorance is bliss's picture

The only people that can afford the high end realestate market are the baby boomers. I thought they would be getting ready for retirment not buying big box mansions.

markar's picture

they need those extra bedrooms to house their unemployed children & grandchildren.

oklaboy's picture

 

 

 

Not

Anything

Realistic

Kaiser Sousa's picture

what is it about the last hour of trading in London that ALWAYS sparks a rocket launch int the equity markets?????????

http://www.marketwatch.com/

Cthonic's picture

Someone with all data feeds (futures/options/equities) could look into that~ oh wait nevermind, bit o' problem seeing that timing of dark pool trades isn't available to us peons that don't run the dark pools.

nakki's picture

Yes let's easy lending standards so a family of 4 making $50k a year (net) can buy that $300k house. Why not let them put 5% down, pay PMI and with upkeep, taxes, and mortgage, they'll only be paying 2k a month. Hopefully they'll have health insurance, no car payments, won't eat much, and never go on a vacation. Hopefully rates will never rise, stocks will never drop, and no one will ever lose their job. That way after 1/2 of their take home pay is gone, they can save %30, invest %30, and give 30% to charity. At least that's what I read on how your dollar should be broken down yesterday.

Moe Hamhead's picture

Boomers are buying here in Florida with both hands.  Naples area, etc.

Getting ready to retire.  As they cash out the FED will have to buy up risk to keep the party going.

When property values tank (again), then what?

SheepDog-One's picture

They're clinging to the ends of many shit ropes.

Ignorance is bliss's picture

I would expect Floirda and other retirement markets to be doing very well. Its the other markets that make me wonder WTF are the baby boomers thinking.

SheepDog-One's picture

'Pending home sales' is just a cop-out like 'the check is in the mail'.....just made-up bullshit.

Colonel Klink's picture

When you're crashing, one usually noses up before the final impact.  Prepare accordingly!

starman's picture

well here in my side of Commifornia median sales price dropped $105,500 or -12% y-o-y and sales well dropped -59%. y-o-y. But I am sure this a good sign for a recovery. No?

Chuck Knoblauch's picture

127 DAYS TO ELECTION DAY!

auntiesocial's picture

LOL on job creation. Yeah, I have been out of work for 5 years and now I am making half of what I normally make... what to do... what to do... I'VE GOT IT! I will run out and buy real estate!

 

 

Chuck Knoblauch's picture

More to follow very soon.

You're not alone, dude.

Spend the time getting into shape.

Learn how to shoot.

Be prepared.

moneybots's picture

"The flourishing stock market the last few years has propelled sales in the higher price brackets," as lower-cost home sales plunge."

 

Wealth effect.

 

Wealth effect benefits the wealthy.

 

Just as the Federal Reserve intended.

Rockfish's picture

"Solid income growth and a sligt easing in underwirting standards"

The first has no chance and second is every banks wet dream.