MacroScope

Pending housing recovery

May 30, 2012

More than five years into an unprecedented slump, the U.S. housing sector continues to languish. Pending home sales fell in April to a four-month low, while house prices continue to bounce along near recent lows. The National Association of Realtors said on Wednesday its index, based on contracts signed last month, fell 5.5 percent to 95.5, its lowest level since December, after a downwardly revised 3.8 percent increase in March. The weakness suggested other more closely watched indicators may also flag in coming weeks and months.

Writes Daniel Silver, economist at JP Morgan:

The level of pending home sales reported for April (95.5) was the weakest reported so far this year, and the latest data point to some weakening in existing home sales ahead because pending home sales – measured when contracts are signed – typically lead existing home sales – measured when transactions are completed – by about one or two months.

The picture that emerged from the home price data was equally discouraging. Prices climbed just 0.1 percent in March, and were down 2.6 percent compared to a year earlier. Yale professor Robert Shiller, one of the two names behind the Case/Shiller index, told Reuters Insider:

I don’t see any signs from our data of a major turning point. (Prices) are up but only on a seasonally adjusted basis and only a smidgeon.

And another key tidbit from the Case Shiller report itself, courtesy of The Big Picture.

With these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.

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