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Economy in Brief

U.S. Pending Home Sales Retraced Most of August Rise; Trend Still Up
by Tom Moeller November 10, 2008

The National Association of Realtors reported that September pending sales of existing homes fell 4.6% from the prior month. Sales had risen 7.5% during August. Consensus expectations were for a slightly more moderate m/m drop.

Despite the latest decline, the level of sales on a three-month basis was up 6.6% from its March low.

The home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.

The Mortgage Meltdown, Financial Markets, and the Economy is adapted from a speech by San Francisco Federal Reserve Bank President Janet Yellen and it can be found here.

Across the country's regions the pattern of recent sales movements has been very erratic. Sales in the West led the September increase with a 3.7% m/m rise on the heels of an 18.4% spurt upward in August. The latest was the highest level of sales since early 2006. But that was all of the good news in the latest home sales report. Sales in the Northeast slumped 16.8% m/m to a new low for the series. Sales in the South fell 7.9% and the decline reversed most of the modest firming of sales during the prior three months. Home sales in the Midwest ticked down 0.7% though sales still were a moderate 12.4% higher than the March low.

Weak home sales are encouraging potential sellers to keep their homes off the market. The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale fell a not seasonally adjusted 1.6% (-2.4% y/y) after a 5.2% August decline. That was the second y/y decline since early 2005.

At the current sales rate there was a 9.9 months' supply of homes on the market, the lowest since February but still higher than 8.9 months last year and 6.5 months during 2006. For single family homes the months' supply fell to 9.4, the lowest since March but still well above the 8.7 average of last year.

The median sales price of an existing single family home fell 5.7% (-9.0% y/y) during September. Prices were down 16.3% from their peak during June of last year. For single family homes, prices fell 5.6% (-8.6% y/y) and they were off 16.8% from last year's June peak.

The pending home sales data are available in Haver's PREALTOR database and the number of homes on the market and prices are in the REALTOR database.

The Federal Reserve Board and the U.S. Treasury announced the restructuring of the government's financial support to the American International Group (AIG) and the text of the announcement can be found here

What Is Liquidity Risk? also is from the Federal Reserve Bank of San Francisco and it is available here.

Pending Home Sales (2001=100)  September August Y/Y 2007 2006  2005
Total 89.2  93.5    1.6% 95.7 112.1  124.3
  Northeast 66.4 79.8 -9.4 85.6 98.5 108.3
  Midwest 83.3 83.9 -3.1 89.6 102.0 116.4
  South 89.0 96.6 -11.3 107.3 127.3 134.8
  West 113.6 109.5 39.6 92.1 109.5 128.6
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