Pending Home Sales Down By Nearly 25%

Posted by John Carney, Feb 07, 2008, 1:35pm

Compared to December a year ago, pending home sales were down 24.2 percent. The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, dropped to 85.9 from 87.2. These are the deals that are expected to close in January and February. House signings were down further than demographic and employment trends had implied.

All this seems to indicate that we've got a long way to go before our real estate led financial troubles are over. Lower housing sales also point to a higher default rate, as homeowners who can no longer afford their mortgages can't find buyers for their property.

But what do we know? Home builders were up nearly 50% in January, presumably on the expectation that lower interest rates would spur home buying. And it's not likely that so many investors could be wrong on something as fundamental as real estate, right?

Dec pending home sales fell 1.5 percent: Realtors [Reuters]

0Recommend this! 17Comments
Posted in: Real Estate

Comments

Posted by s75, Feb 07, 2008 1:43PM

they mostly trade below book value even now, not sure I can remember the last time I had seen an entire industry of stocks as universally oversold.

i would argue that it is more "presumably on the expectation" that most of these public companies are not actually going out of business. i have not heard of any plain vanilla buyers of homebuilders at this stage mostly just short covering but if you know otherwise please share

Posted by Calgary Schmooze, Feb 07, 2008 1:47PM

When things were steaming ahead, nobody wanted to accept Gary Shilling's Insight commentaries... like it or lump it, he's been ridiculously accurate in his calls on real estate meltdowns.

Posted by , Feb 07, 2008 1:52PM

CS wasnt he like 2 years early on that call?

Posted by Debbie Realtor, Feb 07, 2008 1:59PM

Real estate always goes up. It is always a good time to buy. They aren't making any more of it, you know! Buy as much as you can in the best neighborhood that you can. Did you know most buyers accept 60% of their gross income should go to real estate? And, of course, you do that because you're always going to make more money over time!

OK, sign here................

Posted by , Feb 07, 2008 2:00PM

Deb i see u trained with sensei corcoran

Posted by Calgary Schmooze, Feb 07, 2008 2:05PM

He may have been 12-15 months early, for sure. I should have been a bit clearer. His calls appear to accurate based on the numbers he was predicting, even though he was early on his timing. He's even admitted he was early on the timing.

Posted by Anal_yst, Feb 07, 2008 2:22PM

How come the NAR or the MBA aren't being investigated? To this day they're still pumping out radio/tv ads hawing the same pitch as Debbie Realtor ("interest rates are at record lows!", etc). Might as well indict the trade group with the most to lose, that'd at least be entertaining to watch the fallout

Posted by s74, Feb 07, 2008 2:28PM

@Anal_yst i get the feeling at this point everyone is just happy there is someone out there who wants to provide credit to refinance now that underwriting standards are restrictive even to the mini-baller population on anything other than a prime conforming loan with 20% cash on the table

Posted by , Feb 07, 2008 2:46PM

Timing is almost impossible to get. In the bubble (the old one) NASDAQ hit 5000 and look where it fell to and is today. Everyone was right in shorting at 3K once valuation and logic were thrown to the wind, they were just early. How are you ever going to use logic to pick the precise top of blind illogic. All the signs were there then and were here in housing, but it's very hard to guess which straw is going to finally going bring it all down.

Posted by , Feb 07, 2008 3:22PM

agree with 02:46. You give too little credit to Gary Shilling for his insight. Plus, he was spot-on for the beginning of the drop in real estate values, and if you began shorting the home builder index it would have been a profitable move for you in 2005.

Posted by , Feb 07, 2008 3:55PM

I call bullshit, you would have gotten killed shorting the builders in 2005 unless you actually timed it just right and caught the top, index ended the year up 30%, and down only 15% from the summer peak

I know from the painful losses of firsthand experience.

Hey I thought that housing was going to be a short at some point long before 2006 do I get credit for that too?

Posted by , Feb 07, 2008 4:00PM

Even a blind squirrel finds a nut. he also said that in 2007 the yield curve would remain inverted (it is not), stocks would fall below 2002 levels in the midst of a major recession (they did not) china would suffer a hard landing (it has not) commodity prices will nosedive (anyone??)

Posted by s75, Feb 07, 2008 4:04PM

Bottom line - everyone knows markets and economies are cyclical. The real value lies in being able to time these calls effectively. There is no value in warning a recession is upcoming when you are still in an expansion if there is still 20%+ upside and vice versa.

But just in case, I would like to go on record right now as forecasting that the current recession will be followed by another expansion.

Posted by Ron Paul was here, Feb 07, 2008 4:09PM

I forecast that the bottom of stocks will offer subsequent upside potential.

Please contact me if you'd like to subscrbe to a newsletter detailing these views. I will also summarize forecasts of other notable experts, namely s75

Posted by , Feb 07, 2008 4:11PM

My buds were speculating during a drinking night that lots of paper out there trading for 50 is worth more like 70 and the mark lazry's of the world are gonna be all over it soon, if they aren't already. What do you think?

Posted by s75, Feb 07, 2008 4:13PM

I guess a necessary disclaimer is that you may want to take with a grain of salt the economic views of a guy who spelled his own name wrong in a comment @2:28

Posted by Anal_yst, Feb 07, 2008 5:48PM

@ s75 (AKA "s74")

HAHAHAHAH i just almost snarfed all over the monitor

@ 4:11

I've also talked with some guys about how theres paper trading all over the spectrum from "shit" to "garbage", thats really worth from "mostly garbage" to "not too bad"

Post Your Comment