March 2017 Pending Home Sales Seasonally Adjusted Index Declines

The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined. Our analysis says the opposite and the rolling averages marginally improved. The quote of the day from this NAR release:

… sparse inventory levels caused a pullback in pending sales in March, but activity was still strong enough to be the third best in the past year. …

Analyst Opinion of Pending Home Sales

The unadjusted data shows the rate of year-over-year growth improved this month – and the more important rolling averages marginally improved. Because there is so much noise in the monthly numbers – the rolling averages are the best way to view the data.

I continue to see few signs that the residential sales market is improving.

Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).

The NAR reported:

Pending home sales index was down 0.8 % month-over-month and up 0.8 % year-over-year.

The market [from Bloomberg / Econoday} was expecting month-over-month growth of -1.2 % to 3.7 % (consensus -0.4 %) versus the =0.8 % reported.

Econintersect‘s evaluation using unadjusted data:

the index growth rate accelerated 2.9 % month-over-month and up 0.5 % year-over-year.

The current trends (using 3 month rolling averages) are marginally accelerating.

Extrapolating the pending home sales unadjusted data to project April 2017 existing home sales would be a 3.1 % expansion year-over-year for existing home sales.

From Lawrence Yun, NAR chief economist:

…. sparse inventory levels caused a pullback in pending sales in March, but activity was still strong enough to be the third best in the past year. Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range. In most areas, the lower the price of a home for sale, the more competition there is for it. That’s the reason why first-time buyers have yet to make up a larger share of the market this year, despite there being more sales overall.

Sellers are in the driver’s seat this spring as the intense competition for the few homes for sale is forcing many buyers to be aggressive in their offers, Buyers are showing resiliency given the challenging conditions. However, at some point — and the sooner the better — price growth must ease to a healthier rate. Otherwise sales could slow if affordability conditions worsen.