Pending Home Sales Plummet 35% YoY - Biggest Drop Ever As Buyers Forfeit Deposits

Existing home sales collapsed but new home sales rebounded in April, which leaves pending home sales to break the tie and analysts expected a 17.3% MoM drop. However, pending home sales disappointed notably with a 21.8% MoM collapse, sending YoY sales crashing 34.6% - the most ever...

Source: Bloomberg

“The housing market is temporarily grappling with the coronavirus-induced shutdown,” which reduced listings and purchases, Lawrence Yun, NAR’s chief economist, said in a statement.

So while all sorts of narratives about lower rates were puked out to defend new home sales outlier data, it seems pending home sales did not get the message...

Source: Bloomberg

Every region crashed...

  • Northeast fell 14.5%; Feb. rose 2.8%

  • Midwest fell 22%; Feb. rose 4.2%

  • South fell 19.5%; Feb. fell 0.2%

  • West fell 26.8%; Feb. rose 5.1%

That is the lowest level of pending home sales since records began in 2001...

March historically begins the annual peak U.S. selling season as warming weather spurs home searches and families with children prepare for moves during the school summer break. That’s been drastically curtailed in 2020 as the virus triggers the biggest economic contraction in decades, closing workplaces, schools and other activities.

Pending home sales are leading indicators of housing activity, based on signed contracts to buy single-family homes, condos and co-ops, typically occurring one or two months before closings.

As MacroGuru (@macroguru9) noted, "The reason this is significant is it takes 4-8 weeks to close the sale once the contract has been signed. So this huge drop would indicate buyers forfeiting the deposit and walking away as they think the loss on the purchase would be higher than the deposit itself!!!"