The reset of the year for housing looks suspect at best. The pending home sales index is a barely positive 0.1 percent.
Bloomberg Econoday sees things this way.
Pending sales of existing homes rose only 0.1 percent in October, pointing to flat results for the rest of the year in final sales. Pending sales in October were held down by weakness in the South that offset gains elsewhere. The resale market has been soft in contrast to new homes which are having a good year.
Resales had been flat this year but rose sharply in September as indicated in advance by the pending home sales index which tracks contract signings. Forecasters see this index rising 0.8 percent in October.
The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.
Pending Home Sales
Was the pending homes sales slowdown in 2013 related to the taper tantrum and rising interest rates?
If so, there’s a steep decline in store.
Chart courtesy of Mortgage News Daily, anecdotes mine.
Despite treasury rates being substantially lower than the peak in 2013, mortgage rates are well into tantrum territory.
For more details of the Taper Tantrum, please see Bond Tantrum II: Mortgage Rates Up 80 Basis Points Since July.
Mike “Mish” Shedlock