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.
Highlights
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.
Recent History
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.
Definition
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.
Mortgage Tantrum
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
I equate the housing situation to that of the continuing main stream media nonsense of an OPEC deal that is going to constrain supply and increase prices. Housing and oil are headed down.
I live in Norhern California. Pending Sales cannot be good because there is almost nothing on the market to sell! Very few homes. Folks don’t want to sell if they can’t buy another! Building restrictions are stifling most building development. So the prices are going up, up and up! Meanwhile, their solutions are not to build more, but to put in rent control. That’s the liberal way here!
A fundamental difference between a market and a racket, is that in the latter, those who happen to own something, gets to prevent those who don’t, from joining the club.
Whether by machine gunning others attempting to do business in “their” neighborhood, restricting the number of doctors educated each year, or zoning and banning people from building what where.
PAIN
“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.”
If those October pendings did not lock in rate …
What’s Coming Up?
A freight train.
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6 million Americans have stopped paying their car loans, and it’s becoming a ’significant concern’
Business Insider | 11/30/2016 | Matt Turner
Hedge fund manager Jim Chanos has said the auto-lending market should “scare the heck out of everybody,” while the auto-lending practices of some used-car dealerships has been given the John Oliver treatment on TV.
Now the New York Federal Reserve is taking a closer look at the market. In a blog published Wednesday on the New York Fed’s Liberty Street Economics site, researchers highlighted the deteriorating performance of subprime auto loans and set off the alarm.
“The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years,” the report said.
There are, however, signs of stress in the subprime market segment, which has seen rapid growth. Here are the key numbers from the report:
* The subprime delinquency rate for the trailing four quarter period moved to 2% in the third quarter. The only other time it was 2% or more was in the aftermath of the financial crisis.
* Subprime auto loan originations hit $31.3 billion in the third quarter, down from $33.6 billion in the second quarter. Bank and credit unions originated $9.5 billion in subprime auto loans in the period, a record high.
* Outstanding subprime auto loan balances now stand at $280.2 billion, a record high. For perspective, the pre-crisis high was $249.5 billion, in the fourth quarter of 2007