Pending sales index points to declines ahead

Posted by: Peter Coy on April 8, 2008

Bad news today for the housing market. The Pending Homes Sales Index of the National Association of Realtors, which is based on contracts signed in February, fell 1.9% to 84.6. That was its lowest reading since the series began in 1999. It was down from an upwardly revised reading of 86.2 in January. It was also down 21.4% from the same period a year earlier.

Lawrence Yun, the Realtors’ upbeat chief economist, gave the figures a positive interpretation, saying in a press release:

“The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over.”

Reader Comments

Jim

April 8, 2008 4:15 PM

Mr Yun is a PR person trying to maintain calm so that the 1 Million plus Realtor members of the NAR don't all run for the fire exits at the same time! Keep in mind that there is a current moritorium on forestalling new foreclosures, and that the hardships we are currently experiencing from sub-primes is a direct result of over 50 Billion dollars in mortgage re-sets in 2007. In 2008 we are going to deal wiht over 500 Billion in sub-prime mortgage resets, and Alt-A loans will start resetting later this year. This is 10X worse than what we saw last year! This is what happens when you think you can buy with no money down!

Roger

April 8, 2008 4:33 PM

I don't necessarily want to be a gloomy Gus on this one, but it's in Yun's interest to spin that stat positively (how many people would run out to buy a house if they thought prices would go even lower?). Maybe there's more to this story than appears here, but how he draws the conclusion that the 'era of deep sales declines' is over is lost on me since it is down 21.4% from last year. Maybe the survey really just gives the intpretor what they want to see. My impression, which could be faulty, is that foreclosures are the only think actively selling in the San Diego area.

jane reamsnyder

April 8, 2008 5:02 PM

I don't know how he comes to that conclusion
in light of the fact that companies are still
laying people off and the Columbian trade agreement will most likely be implemented, so
that will take away more jobs. these free trade agreements are costly, not free.

Mitch

April 14, 2008 12:34 AM

I agree with Lawrence Yun 100%. In fact I'm going out to buy a house right now. After all, he's never been wrong before has he? LoL, SIKE!!!! How is this man still allowed to be quoted on any type of news medium? He must hold some type of record for being continuously wrong.

Mark in SF

April 14, 2008 3:29 AM

I have to chuckle anytime I see a quote from Mr. Yun. All you have to do is look back at his quotes over the last few years to see that he is just a shill. I do have to wonder though why BusinessWeek pays him any attention. Maybe just to mock him?

Andy

April 14, 2008 8:43 AM

Remember that other FTA are coming soon
to vote !

Fensterlips

April 14, 2008 12:07 PM

I'm not sure how Lawrence Yun maintains any credibility with the consistent Pollyanna statements that fly in the face of reality. Maybe he has to spout this hooey because his office demands it and he hopes to buck up just one person or push just one more sale. In the end real estate agents and Realtors will be seen for the used car salesmen that they are and the market will value them appropriately. Mr Yun cheapens the value of agents and deemphasizes honesty with every pronouncement. It's sad to watch.

Toby Pagan

April 14, 2008 12:59 PM

Mr. Yun has been dead wrong for about eleven quarters now. As a former REALTOR I am disgusted by the spin coming out of NAR over the past four years. What NAR and Mr. Yun fail to understand is that no amount of jawboning will overcome basic economic forces. Of course housing will eventually turn around, but not anytime soon, and certainly not at the command of NAR.

Toby Pagan

April 14, 2008 1:00 PM

Mr. Yun has been dead wrong for about eleven quarters now. As a former REALTOR I am disgusted by the spin coming out of NAR over the past four years. What NAR and Mr. Yun fail to understand is that no amount of jawboning will overcome basic economic forces. Of course housing will eventually turn around, but not anytime soon, and certainly not at the command of NAR.

Keenan

April 14, 2008 4:05 PM

For those who are freaking out about all the upcoming "resets" this year and next, you are forgetting one thing: RATES HAVE DROPPED ALMOST 3% AND ARE SET TO DROP AT LEAST ANOTHER 1% THIS YEAR! The fact is that IN MANY CASES, MORTGAGES THAT RESET THIS YEAR AND NEXT WILL RESET TO A LOWER RATE!

I'm not saying that the real estate market is out of the woods, but all this talk about the looming disaster of "rate resets" are people who don't know what they are talking about. If rates had stayed the same as they were last year, than yea, it would be a disaster. But you need to update your calculations for the current rate environment, duh!

Toby Pagan

April 15, 2008 8:01 PM

Keenan, Unfortunately many of those resets are based on LIBOR and not the discount and/or prime rate. LIBOR is still about 30% higher than they are paying now. Compounding this are the 30% or so subprime pick-a-pay loans with negative amortization which automatically converts to a 30 year fixed rate loan averaging 4-5% over LIBOR. And regardless of the interest rates the lack of equity (declining values) is a primary driver of foreclosure. The rate cuts have helped some, but not nearly enough.

IraqiMinisterofInformation

April 19, 2008 3:37 AM

Hello Americans! This is the former Iraqi Prime Minister of Information. My new name is Lawrence Yun working as NAR PR man. Like I tell you, there is no Americans in Bagdah because we Iraqi will roast the belly of American troops. One more thing: There is no more decline in real estate prices in California. Long live location, location, location!

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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