Pending Home Sales Tumble In The West As "Demand Is Starting To Weaken"

Tyler Durden's picture

Following the weakness in new home sales, starts, and permits, pending home sales modest beat of expectations (+1.4% MoM vs 0.5% exp) provides a glimmer of hope for homebuilders and recovery-narrative-buyers. The decoupling between new- and pending-home sales was also seen at the start of last year, and ended badly for pending home sales...

 

 

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.4 percent to 110.5 in March from an downwardly revised 109.0 in February and is now 1.4 percent above March 2015 (109.0). After last month’s slight gain, the index has increased year-over-year for 19 consecutive months and is at its highest reading since May 2015 (111.0).

Lawrence Yun, NAR chief economist, says last month’s pending sales increase signals a solid beginning to the spring buying season.

“Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” he said. “This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth.”

 

In the short-term, the healthy labor market and favorable borrowing costs should lead to sustained buyer demand and a durable pace of sales. However, Yun says the consequences from a failure to construct more single-family homes in recent years are starting to impact some top job producing markets, where endless supply shortages continue to limit choices for buyers and are driving up prices beyond what a growing share of households can comfortably afford.

 

“Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38 percent in the past three years,” adds Yun.

 

 

“As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace.”

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jus_lite_reading's picture

I said it once, I'll say it again, these cookie cutter home builders like Troll Bros and KB Toys need to go the way of the Dodo bird before there is a REAL recovery.

I am Jobe's picture

TX is different, not, Now more KB and Troll Brothers crap , cookie cutter homes and stupid Texans want to be brainwashed

Ghost of Porky's picture

Hah! I just toured a KB model and nearly broke the bannister by leaning on it.

 

These places are made of cardboard yet list in the mid 800's.

Hitlery_4_Dictator's picture

Sorry, these aren't real Texans that are buying these homes, they are carpet baggers. Mostly CA-tards.

KnuckleDragger-X's picture

Yep, that's why we have Houston and Austin......

CPL's picture

Protip:  Everyone is broke and disposable income is negative if reviewing the individual consumer debt.  Ergo, there is no housing market.

Ghost of Porky's picture

I know a few Chinamen who disagree.

83_vf_1100_c's picture

  They are just laundering money.

buzzsaw99's picture

the theory around here seems to be that one can never have too many humongous new houses.

Occams_Chainsaw's picture

We housed some folks....

NurseRatched's picture

The obvioius answer to low home sales is to lower the borrowing standards further.  Why should lenders be so damned obsessed with getting paid back?  Any good politician will tell you that we can fix the housing inventory problem by making mortgages more affordable.

Cautiously Pessimistic's picture

I know that in my neck of the woods (Atlanta metro area), they are still throwing houses up like there was no tomorrow.  And I am not talking about cookie cutter 200- 250k types either.  We are talking about 500k plus type McMansions and for the life of me, I don't know who is buying these things?? Unless of course, it was Gubmit employees, because they are the only ones making money these days.

Falconsixone's picture

Good, I have enough moron californians when the shtf around here. Their idea of getting out of the city and in to paradise is to come here and walk down the street then go roundup some weeds.

Muppet's picture

Do we cover NAR press releases? I thought everyone agreed they are contrived garbage.

Houses Depreciate's picture

Why buy it when you can rent it for half the monthly cost? 

Consuelo's picture

"In the short term, the healthy labor market and favourable borrowing costs..."

 

 

When is someone going to put LIE to this nonsense of conflating the 'bartender economy' with the facility to purchase a house in today's market, because essentially, that is what Yun (and every other cheerleader) is doing...

stock market loser's picture

In Orange County Commiefornia the new home builders are hoping to reel in the last of the rich Chinks before the RE crash comes. 

Paul John Smith's picture

Yeah ...

(but ...)

(I got nothing)