17 Month Negative Pending Home Sales Streak Ended, But?

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Please don’t overhype this! 

Recently in my articles and social media post, I talked about how a lot of housing data is about to show positive YoY growth. We saw that in housing starts and now today in pending home sales.  The comps are about to get a lot easier on a year over year basis. Especially in September, October, November, and December that is where we saw the weaker data last year in the existing and new home sales market.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2019/07/30/pending-home-sales-second-month-of-growth

August Pending home sales

As long as we keep this growth in context, we are fine. Housing has notoriously been known for over hyping short term data or as I like to say Institutional Economic Structures which are shackles into a one-story narrative. We find this common with groups like the Gold Bugs, MMT, Republicans or Democrats running for office. However, housing on the other side of the moon, where they tend to overhype positively too much. On the other hand, we always have the housing bubble 2.0 or everything is a bubble group with housing. This group just doesn’t have the economic game to talk about the housing, mostly a one-trick pony to sell some website or doom and gloom. I really wanted to showcase this group late last year because as always, they believe every soft data line is going to lead to a collapse.

Housing Bubble 2019?

https://loganmohtashami.com/2019/07/07/housing-bubble-2019/

This really is a hard way to live, but I find it amusing that they will be stuck in this shackle until the afterlife and then some.

All in all, the existing home sales market looks fine in 2019.

In 2018, I wrote:

“I am looking for sales to trend flat to negative between 4.92- 5.29 million with slightly more inventory in 2019, but not a dramatic difference.”

https://loganmohtashami.com/2018/12/29/2019-economic-housing-predictions/  

The prediction above was made even with my mortgage rate forecast going down this year.

“For 2019, I am sticking to my call that the 10-year yield will channel between 1.60% to 3%.  If world trade gets weaker, we could see the 10-year yield with a 1% handle again.”

We can end the year with negative existing home sales and still have a few positive prints on a year over year basis. That was the forecast this year, and that was the forecast last year. However, more important, the real story is not much is happening in the existing home sales market outside a slightly weaker trend in demand with a rising inventory.

Today you can even see it in the Case Shiller index that adjusting to inflation we are negative on YoY basis on the 3 components on the chart. Nothing too drastic but a weakening in pricing. This is healthy, and how a market should act, weaker demand, supply rising, and pricing get softer. Not everything is housing is in nirvana or bubble 2.0., we do have a middle story game out there which I know isn’t sexy to report.

From Doug Short: 
https://www.advisorperspectives.com/dshort/updates/2019/07/30/s-p-case-shiller-home-price-index-annual-home-price-gains-dip-to-3-4

August Adjusting to Inflation YoY

Keep things in context, and you should be fine. Even though demand is down this year, 2019 looks roughly like 5,900,000 total home sales year with purchase application data at cycle highs. Most important is that the new home sales market place recovered from an awful sales trend late last year.

From Calculated Risk;
https://www.calculatedriskblog.com/2019/07/mba-mortgage-applications-decreased-in_24.html

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Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page https://www.facebook.com/Logan.Mohtashami