Following the March pending home [5]sales report which saw growth moderate after February's 3.6% surge to 1.1%, the flurry of contract signings, not actual purchases, in April rebounded by 3.4% - the biggest jump since September 2012 - far above the 0.9% consensus estimate and 14% higher than a year ago, pushing the pending home sales index to 112.4, the highest level since 2006. The driver: pending sales in the Northeast, which soared 10.1% from the month before, and 9.4% from a year ago.
Quote NAR's chief economist Larry Yun:
"Realtors are saying foot traffic remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas," he said. "Homeowners looking to sell this spring appear to be in the driver's seat, as there are more buyers competing for a limited number of homes available for sale."
Adds Yun, "As a result, home prices are up and accelerating in many markets."
He is hopeful the jump in contract signings means a comparable increase in actual existing home sales:
Following April's decline in existing-home sales, Yun expects a rebound heading into the summer, but the likelihood of meaningful gains will depend on a much-needed boost in inventory and evidence of moderating price growth now that interest rates have started to rise.
"The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers — especially first-time buyers — are able to obtain a mortgage."
In other words, those buying continue to be mostly all-cash foreigners, money launderers, or home flippers who are competing with each other for a very limit amount of housing inventory, like Hanergy, like CYNK. As for interest rates "well above 4%", the housing market may be able to handle them, but nothing else will.
The regional breakdown:
- The Northeast bounced back solidly (10.1 percent) to 88.3 in April, and is now 9.4 percent above a year ago.
- The Midwest the index increased 5.0 percent to 113.0 in April, and is 13.3 percent above April 2014.
- The South rose 2.3 percent to an index of 129.4 in April and are 14.8 percent above last April.
- The West inched 0.1 percent in April to 103.8, and is 16.4 percent above a year ago.
As a reminder, the surge in Northeast pending home sales is in stark contrast with the collapse in new home sales in the Northeast which plunged 19% from a year ago.
Which begs the question: just why are homebuilders so leery of building new homes in the Northeast where, at least according to the NAR, housing demands is off the charts? A few more months of this discrepancy and it will be time for one of those "someone is lying here" posts.


