Thanks to a series of negative revisions, pending home sales have now tumbled YoY for two consecutive months (dropping 2.2% in July versus an expectation of a 2.2% rise). The revisions enabled the MoM print of +1.3% to beat expectations optically (thanks to a surge in The West sales +7.3%). The good news for affordability is that NAR's Larry Yun notes homebuilders focusing down-market; the bad news, obviously, is that more supply will disable the low-inventory bid holding prices up at record highs. Probably time to hike rates…
Revisions pushed the series lower, making this the 2nd monthly decline YoY in a row…
Thanks to revisions, the MoM gain of 1.3% headline beat expectations, thanks in large part to The West
- Northeast up 0.8%; June rose 3.2%
- Midwest fell 2.9%; June rose 0.9%
- South up 0.8%; June fell 2.9%
- West up 7.3%; June fell 1.3%
Of course the lagged movement in mortgage rates is still a positive… (until The Fed hikes?)
And while mortgage apps rose last week (despite a modest rise in rates), the improvement is slowing.
Lawrence Yun, NAR chief economist, says a sizable jump in the West lifted pending home sales higher in July.
“Amidst tight inventory conditions that have lingered the entire summer, contract activity last month was able to pick up at least modestly in a majority of areas,” he said. “More home shoppers having success is good news for the housing market heading into the fall, but buyers still have few choices and little time before deciding to make an offer on a home available for sale. There’s little doubt there’d be more sales activity right now if there were more affordable listings on the market.”
Adds Yun, “The index in the West last month was the highest in over three years 1 largely because of stronger labor market conditions. If homebuilding increases in the region to tame price growth and alleviate the ongoing affordability concerns, the healthy rate of job gains should support more sales.”
Recent residential construction data shows that the size and costs of new homes has moved downward over the past year. According to Yun, this is an early indication that homebuilders are beginning to shift away from building larger, more expensive homes for the upper end of the market to focusing more on properties geared for buyers in the middle and lower price tiers.
“The homeownership rate won’t move up from its over 50-year low 2 without a meaningful boost from first-time buyers, whose participation has yet to noticeably increase so far this year despite mortgage rates near all-time lows .”
via http://ift.tt/2bGBAGc Tyler Durden