Forecasters expected sales of existing homes to rise in June because the pending home sales index, which measures signed contracts, rose in May. If you consider it takes 1-2 months to close, then there's your indicator.
But that was not the case. Sales fell, not by much...
What Realtors and prognosticators did not even consider was a strange phenomenon: June saw a spike in the contract cancellation rate to 16 percent. Existing home cancellation rates usually run under ten percent, and, in fact, in May were at just 4 percent. Cancellation rates for new home construction usually run higher than that, as buyers of newly built homes tend to be more volatile and put less (often nothing) down when signing a contract.
"I think it's the broader, very slow economic activity," said Lawrence Yun, the National Association of Realtors' chief economist, who earlier told a room full of reporters that he was still trying to find the source of the spike. "The economy is expanding at a very slow pace, job creation is very slow, the consumer confidence has certainly taken hit in the second quarter, so there could have been some buyers who had some second thoughts and just decided to pull out of the contract, but at the moment it's still unclear as to why there was a measurable rise in cancellations."
Thursday, July 21, 2011
Home sales cancellations spiked in June
The existing home sales cancellation rate, usually under 10%, spiked to 16% in June:
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http://online.wsj.com/article/SB10001424053111904233404576462213893956224.html?mod=ITP_marketplace_1
ReplyDeleteCase Schiller is out, with lots of revisions to the DC index, particularly in the sales pairs which increased in Feb, Mar, Apr by 12, 42, and 57%, respectively. What is going on there? Perhaps distressed sales result in slower reporting to C/S?
ReplyDeleteMore importantly however, the index was adjusted down for all 2011 months. This made my wins in Feb and Mar more solid, and flipped Apr from Partisan's side to mine. The May number, for now at least, falls to Partisan, putting us at Jon: 3, Partisan: 1.
The index adjustments for March pulled the index down from 181.3 to 177.8 and April from 186.8 to 180.5. One wonders where the May reading of 184.9 will fall. These downward adjustments are what make me suspect that distressed sales reporting rolls in late, thus resulting in the downward adjustments once C/S factors them in.
Your thoughts?
Dammit! Im partially mad that im wrong, but mostly mad that CS is continuously making huge revisions - CMON guys!!!
ReplyDeleteAs far as I can tell, the only # they appear completely satisfied with is Jan 2011. Everything past has revisions (some slight, some big). They did acknowledge they were having problems with a few markets, including DC. Hopefully they will get their act together.
Im kinda busy now so I wont do a fuller post til next months CS. For now I say good call JAC as you are kicking my ass 3-1 thus far!!!
Well, still awfully early and my predictions turn south fairly dramatically (a bit too early, in retrospect). We'll see how it unfolds, but my scanning redfin for properties in the Petworth area as well as condos in the rest of NW seems to indicate buyers are for the most part in control.
ReplyDeleteI'm $30,000 underwater on my mortgage. To come up with that I've started selling loaves fo bread. I have to sell 5,997 more loaves before I can refinance. Visit http://6000loaves.blogspot.com
ReplyDeletehttp://www.redfin.com/DC/Washington/3420-16th-St-NW-20010/unit-109S/home/10011012
ReplyDelete