Today’s pending home sales came in as a miss but showed a correct trend that I believe would be the case due to this virus, short term. This steep drop in demand due to lockdown protocols, the mortgage market meltdown of March, and now over 40,700,000 Americans filing for jobless claims looks about right. However, this is now backward-looking, and we need to wait until July to read June’s existing-home sales report to account for the recent epic growth in purchase application data.
From the NAR: The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 21.8% to 69.0 in April. Year-over-year, contract signings shrank 33.8%. An index of 100 is equal to the level of contract activity in 2001.
From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2020/05/28/pending-home-sales-slump-in-april
In a lot of my recent articles, I have told my readers to put an * around March, April, and May’s housing reports and wait until July 15th and then take a look at all the June’s data to get a more realistic grasp of the state of housing.
Recently I also gave an update on the 5 things I wanted to see to get back to the AB (America is Back) Stage.
Usually, we wouldn’t have such a wild roller coaster ride with housing data, but the virus and lockdown protocols changed the game. However, as always, the virus can’t kill off the two most important factors for housing, demographics, and low mortgage rates. Both of these are at historically favorable levels for the United States of America. I would still be focused on the purchase application story on a YoY and weekly basis. Know that the peak heath month of May has a significant recovery to make this possibly an average housing year (Any Existing Home Sales Report Above 4,600,000 In The AD Phase) and not the crash that a lot of American bears would have hoped for.
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 Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.