Signs of liftoff in housing as well as manufacturing are nothing more than an illusion in statistics.
This morning, the Pending Home Sales Index jumped 1.3%.
That is welcome news to those who believe chasing rising prices is a good thing. Beneath the good news, pending sales jumped 1.3% after a June revision from +0.2% to -0.8%.
Pending home sales jumped higher in July but from a June that is now revised sharply lower. The July index came in at 111.3, a level that is only marginally above June’s initial reading of 111.0 but is 1.3 percent above the revised level of 109.9. The index hit a recent peak in April at 115.0.
Looking at the year-on-year rate, pending sales are up 1.4 percent which doesn’t point to much acceleration ahead for final sales of existing homes where this rate in July slipped into the negative column for the first time in two years.
Regional data show the West out in front after a sharp rise in July, at a year-on-year plus 6.2 percent followed by the Northeast at 1.1 percent and the South at 0.4 percent. The Midwest is only the region in the negative column, though only at 1.1 percent.
Sales of existing homes aren’t showing the life that sales of new home sales are showing though strength in the latter does point to strength ahead for the resale side.
Diving Into New Home Sales Strength
Econoday almost put out a decent article. The last sentence did them in.
At best, new home sales represent demand at increasingly lower prices. If one bothered to look, the reported surge in new home sales rose to the 1963 level.
With the jump in sales came a not so pretty tidbit on median sales price.
For discussion please see New Home Sales Surge Most Since 2007, Median Price Down 5.1%, January-to-July Sales at 1963 Level.
Existing Home Sales Sink 3.2% in July, Down 1.6% From Year Ago
On August 24, I reported Existing Home Sales Sink 3.2% in July, Down 1.6% From Year Ago.
Econoday commented “Today’s report does take some shine off yesterday’s sales surge for new homes. Still, lower prices together with higher supply are pluses for existing home sales ahead.”
I replied “Allegedly, weaker sales is a plus for supply, and a plus in supply will lead to strength in sales. Wow.”
Despite the fact that pending home sales have been very weak, no economist expected the decline in existing sales.
Are economists reading and feeding off Econoday BS, or is Econoday feeding off BS economist expectations?
Mike “Mish” Shedlock