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Pending Home Sales Plunge In November, Realtors Warn Fed Over Higher Rates
Having seen New Home Sales disappoint and Existing Home Sales crash in November, Pending Home Sales plunged 0.9% MoM (against expectations of a 0.7% MoM rise). Having plateaued in October near 8-month lows, today's huge miss was driven by a plunge in sales in The West (-5.5%) and NorthEast (-3.0%). Home sales rose just 2.6% YoY - the weakest since October 2014. The excuse factory was busy with weather, home prices, and inventory trotted out but, perhaps most notably, Realtors warned that higher mortgage rates will temper sales growth in an explicit threat to Janet to "hold."
As NAR reports,
The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.9 percent to 106.9 in November from an upwardly revised 107.9 in October but is still 2.7 percent above November 2014 (104.1).
Although the index has increased year-over-year for 15 consecutive months, last month's annual gain was the smallest since October 2014 (2.6 percent).
The excuse-fest was rampant, Lawrence Yun, NAR chief economist, says November's dip in contract activity continues the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May.
"Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains," he said.
"While feedback from Realtors continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers."
"Especially with mortgage rates likely on the rise, affordability issues could creep up enough to temper sales growth – especially to first-time buyers in higher priced markets," adds Yun.
So prices are too high... and rate-hikes make it even less affordable?
Blame Janet!!
Charts: Bloomberg
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0.9 % is a plunge? What are you guys smoking?
A 1.6% miss for the National Association of Realtors is a disaster.
Allow me to interpret...
"Realtors admit the fantasy world they have lived in for the past 8 years came completely at the generosity of the Fed's money give away program"
hahah fuck you realtors and the NAR....eat shit. We have way to many paper pushers and used salesmen. Time to find real equalization. Stop lying to Americans.
The Most Foreclosure-Heavy States in America
http://www.msn.com/en-us/money/realestate/the-most-foreclosure-heavy-sta...
6% Janet! Is this an economy or not!?
Housing is over-priced by 2X in most markets, and 10X in others.
Wait a second....Larry Yun said everything was great just yesterday.
RE never goes down, right?
It was too warm and springlike! I had the sun in my eyes!
slowest trainwreck of all-time. i personally have been itching to buy a house but absolutely will not since its beyond glarring whats coming. i live in NJ, bought my first house in 2008, sold it in 2015. during that time, my property taxes nearly doubled, services in the town got sliced & diced, and i wound up selling it nearly 25% lower than what i paid for it, 40% less-than what i put all-in to it. i don't see the trajectory for state taxes going anywhere but up, good paying jobs flat-to-down, interest rates attempting to go marginally higher over the next year. throw-in the fact that IF we get a new president who is able to tackle tax reform & deductions MIGHT be affected. if the mortgage interest deduction is touched in any way-shape-or form, that would be lights-out IMO for the market here as a whole.
@aliki ... Whoa, dude, your post just described my situation and my thoughts andcreaction to the same...are you me? I think there must be more of us. Housing is a dumb move at this point.
PAPIBOBSEEUSMULCH - i got absolutely crushed buying a house & getting married. exactly why ill be doing both again N-E-V-E-R
paid my dues to both the courts, ex-wife, and the bank (i didn't walk on the place, i, like an idiot, did the "right" thing by saving up & paying off my note).
agreed on the dumb move part. again, ive been ITCHING to get another place; had 1 on my radar down by the jersey shore line. was brand spankin new & very tempting price-wise. guy i work with basically slapped me upside the head & said "what are stupid - you are liquid & portable ... u wanna give THAT up especially the way YOU see the world going?!?!?!"
he was right, i came to my sense, and now i still enjoy my temporary and flexible lifestyle. head goes on the pillow every night & babies don't sleep as good as i do. can't buy that.
I recall my parents buying a house in the early '70's at 19% interest rate, of course the house price was $20k.
The home mortgage rate around 1972 was 5 3/4% with no points. By 1979, the mortgage rate had climbed to around 17% with points, thanks to Fed chairman Volcker using monetary policy to control inflation. Inflation caused by the "oil shock" in 1973 as crude oil prices jumped from $5 a barrel to whatever the market would pay, pushed in part by America's friend, the Shah of Iran. Big Oil did its part, daisychaining oil imports to jack the price higher. In the Northeast, natural gas suppliers could not advertise too much to consumers to switch from home heating oil to gas for some reason. In any case, a $20,000 house in the USA in 1972 near doubled in cost by 1980 in the Northeast. Housing had been dirt cheap.
There has never been a better time to sell your overvalued home and leave some sucker holding the bag.™
Sell your home and do what,, pay all time high rent?? Very few are gonna keep paying their mortgages if home prices drop 50-250% anyway, so then what??
Sell your house while the market is toppy, rent until the prices substantially decrease, then maybe buy another house?
Many analysts predict three more rate hikes in 2016 so I expect the house prices to respond concommitantly...downward.
I notice an earlier post this morning from Roach:
Houston home sales decline by double digits amid oil slump
Houston home sales fell 10.2 percent year over year in October, according to the latest monthly report from the Houston Association of Realtors.
Single-family home sales took a nosedive in all price categories. Houston’s townhome and condominium market saw the greatest hit in sales, tumbling 17.3 percent in October.
http://www.bizjournals.com/houston/news/2015/11/11/houston-home-sales-decline-by-double-digits-amid.html
... and it's only starting its decline! The only ones able to fund a house are the zero-down vets who are pensioned and the gubmint parasites who have been steadily handed salary increases and bonuses no matter how miserable their performance.
That's right Fred...that's my advice.
Of course no one is listening, just like in 2006...
Fuck 'em.
The FED is propping up housing, meaning for the most part home prices will NEVER drop, at least not anywhere you would want to live.
Even is home prices start to come down, the FED just gives some big hedgefund a few billion to buy up all lower priced homes which then they rent out at inflated rates.
Its all a big fucking scam
That's the defination of gambling...be it stocks...the casino or home buying. Good luck with that move. Either way the realtor wins...
Buy low, sell high, buy low again.
Did that last Jun and loving it. Renting now at about the same as what the mortgage was but with no maintenance costs. No fences to repair, no worries about having to re-paint the stucco or put on a new set of shingles, all things that the old house was going to need soon. Have actually been able to save some money for the first time in 5 years.
You forgot to mention my favorite benefit: no property taxes. :)
Yep, depending on where you live you get to keep $1500 - $15,000 FRNs each year that would have otherwise been stolen...er, I mean "collected" from you by Uncle Sugar township, city and county.
It;s for the Children. THome prices are good for future generations to be slaves and to enjoy the life the parents have left behind . Ah the future is looking bright for SLAVERY
http://www.washingtontimes.com/news/2015/nov/8/property-taxes-on-the-rise-around-kansas/
Property taxes continue their steady risehttp://registerguard.com/rg/news/local/33633774-75/property-taxes-continue-their-steady-rise-as-allowed-by-oregon-law-owners-will-find.html.csp
“ Change you can believe in! “
Hey Larry 1/5 (8-10% delinquent, 10-11% who've never made a payment, since 2010, 2011) of all those first time buyers, you know those college students who haven't made a loan payment in 4-5 years, might have a little problem trying to buy that first house.
Then again maybe they can get a 0% down $600,000 mortgage to keep the bubble going.
"Ignoring the more politically difficult structural reforms ultimately results in structural failures. Structural failures always result in severe losses and the real question is not if, but when there will be a structural collapse.
Cosmetic Central Bank interventions can extend and cover up the death spiral process, but they also create zombie economies (25 years in Japan). Europe is in zombie decline and the U.S. is in its seventh year of zombie stability, not moving.
The American people could be in economic misery for many years before honest, strong leadership gathers the courage to state the whole truth and nothing but the truth; to prosecute financial crimes, and to restructure our entire financial system from top to bottom."
i wouldn't call that plunge
Classic ABCD (zig-zag) pattern. That is all. It will resume the rise in coming months.
I will say, author is correct about delay in household formation. Responsible young people are either bought houses during the downturn and are cashflowing them (subletting to multiple tenants), or are avoiding it, altogether. I'm in the latter camp. I just look around and see these worthless houses that the 'owners' don't really own, as debt vehicles. It's the only way I can look at them. Why would I want one?
The real danger to housing comes from the strong dollar. We will see a big slowdown in illicit foriegn money buying US real estate. It is already happening in my area of Florida.
They bought when the prices were low and the dollar was weak. They are selling at high prices and the dollar is strong. When they convert the sale in dollars to their currency they come out even further ahead. Something doesn't seem quite right about the whole thing when they all return home with more of our dollars.
Didnt we get a report yesterday that housing prices were rising? If sales are plunging how are prices rising? This shit is all a lie!
And the same in reverse is true for gold: missing inventory with increased demand = lower prices??? Everything is upside-down!
This is Obamamerica. Up is down, inside is out, and right is wrong.
Any data produced must be interpretted as a positive for Obama.
The wife and I dream shop homes daily, but no way we are dropping 200k on some 40 year old shack with shag carpet. Sorry older people, but you need to update.
Here is a quote from John M. Cunningham...
"In 2005, the 30-year hovered around 5.5% and in 2006, it hovered around 6.5%. As we recall, that rate plus reduced lending standards, preceded securitization of Mortgage Back Securities.
Then the subprime loans enabled “Homes for the Homeless.” The housing boom was set on fire, and Las Vegas welcomed billions in windfall home equity loan proceeds to its tables, slot machines, bars, restaurants, massage parlors, and persons of the night. The sky was the limit and the “build it, and they will come” mantra possessed normally sober minds.
But then the subprime market, that is the loans to the homeless, went slightly awry. Some of the brightest minds in finance were genuinely shocked. Others including Goldman Sachs, John Paulson, and Jim Chanos among others shorted the mortgage market and made billions.
March of 2007, Fed Chairman, Ben Bernanke said,
“Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear…At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”
That was the call of the century Ben. Not sure why people pay $250 K to listen to you speak.
So, let’s imagine ratcheting the 30-year back to the boom times of 2006, or the average rate of 6.51%. What would this do to the so called housing market in 2015/2016?
Raising the 30-year by 250 basis points would “Kill it.”
And this is an understatement.
Historically low interest rates are just one factor. Let’s recognize the structural socioeconomic trends in the housing market that are driving rent vs. purchase decisions:
· Home prices have recovered in most areas. In some areas prices are at new highs. For those most in need of new housing (the millennial generation), home prices are not affordable.
· Supply. Many empty-nester and aging boomers are downsizing. This demographic trend leaves a big supply of upper-end homes for sale, at prices few can afford.
· Aging parents. Millennials have moved back home to take care of their aging parents.
· Student Debt. High student debt has caused a delay in marriage and household formation.
· Caution. Millennials are understandably more cautious about taking on high levels of debt in an economy that is unsound and a labor market of part-time jobs.
· Mobility. The desire to stay mobile also impedes new home ownership."
Fuck the realtors and the Fed.
Ref:
https://www.linkedin.com/pulse/truly-big-shorts-john-m-cunningham?trk=pr...
"Pending Home Sales plunged 0.9% MoM...."
“Plunged 0.9%”. Hmmm. Now, had pending home sales gone down 20% or even 12%, that’d be a “plunge.”
But 0.9%??? Naw, that’s just good ol’ fashioned Zero Hedge hyperbole. Like this one from 2009:
“World Going to Hell in a Hand Basket…Mad Max Scenario by 2012”
.9 percent is no plunge. Housing is stupidly overvalued and will remain so unless any of you really think the fed is going anywhere (it's not). I advise you to do what I did: go to an economically repressed rural area and buy the cheapest livable house in town. My mortgage payment is way less than rent on the cheapest apartment in the county..
I remember when having a 10% mortage was doing really good.
I have been an active real estate agent for almost 36 years and have never seen such a quagmire foisted upon the American people. Everyone started believing 100% home ownership was a right and most (+35%) forgot there are responsibilities that go along with it.
Now we are in a mess whereby Realtors need to sell, homeowners are scared and buyers don't really exist. Therein lies the rub - a false economy based upon misguided thinking.
Realtor greed is a big component for higher home prices. They are worse than used car salesmen..
Wow. Would they be screaming and suing if Janet raised rates to 4%? 6%? I can hear the screams now, without opening any windows...