Tuesday, September 9, 2008

July Pending Homes Sales down 3.2%

July pending home sales fell 3.2 percent to 86.5.  June pending home sales were revised upward to 89.4.  July numbers are down 6.8 percent from a year earlier.

Lawrence Yun, NAR chief economist, said home sales continue to edge up and down. “Pending home sales are oscillating month-to-month, with the long-term trend essentially flat,” he said. “Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

Even with the latest pullback, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing. “Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets,” Yun said.² “The outer Washington, D.C., exurbs also are coming around very strongly. The Northeast region retreated following a robust gain in the previous month, and soft activity was observed in the broad midsection of America despite very affordable conditions.”

Affordable?  The reason they are not selling is they are not affordable.  Just because the prices go down does not mean they are affordable.  The prices still need to come down further in order to be affordable. 

It's going to be interesting to see where the interest rates go with the nationalization of Freddie and Fannie.  The MBS securities yield went down 25 basis points yesterday.  Will the mortgage rates go down further?  Or will the nationalization pull up all the other interest rates?

Yun said there are many ambiguities in the marketplace. “The economy is producing more, yet cutting jobs. A first-time home buyer tax credit and lower interest rates on newly conforming jumbo loans favors consumers, yet buyer confidence remains low,” he said. “Even with the Treasury Department’s direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.”

Glad you asked.  The economy is producing more because the inflation rate used for GDP calculations is 2%.  Looks like Yun wants NINJA loans back.  What a moron..he wants "sound" and "normal" underwriting criteria!  How about let's have 20-30 percent down back?

But then again may be this is the first time I've heard NAR saying the housing market outlook is very cloudy.

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