Pending home sales index drop to lowest level ever

Tuesday, October 02, 2007 | 01:29 PM

Ouch!

The WSJ reported:

"The battered housing sector took another blow Tuesday, with an industry group reporting that a gauge of pending home sales tumbled to its lowest level ever as the credit crunch restrains purchases.

The National Association of Realtors' index for pending sales of previously owned homes decreased at a seasonally adjusted annual rate of 6.5% to 85.5 in August from July's 91.4, the industry group said. The August index was at its lowest point since tracking began in January 2001. The previous low was 89.8 in September 2001."

Via Lehman Brothers, here's the chart:

Pending_homesales_index

Of course, this is (somehow) good news for the homebuilders:

"Shares of the major publicly traded U.S. residential builders rose for a second straight day Tuesday as investors bet that the stocks have bottomed out after months of freefall. The upswing, which saw most of the biggest firms rise 3% to 7%, came despite the latest government report showing weak pending home sales.

Flattened by the mortgage crunch, a forward-looking gauge of home sales fell further in August to its lowest level in more than six years, a real-estate trade group said Tuesday.
The pending home sales index fell 6.5% in August after dropping a revised 10.7% in July, the National Association of Realtors reported Tuesday. The index is at its lowest level since its inception in 2001.

It could be a case of investors believing the situation cannot get any worse.
Residential builder's stocks have been battered this year as housing-market conditions have continued to deteriorate and tighter lending standards stemming from the credit crunch have made mortgages more difficult to secure."

More likely, these are still crowded shorts, and every major piece of news seems to be an opportunity to either cover or squeeze the stocks higher . . .

Recall last month, we suggested a bounce was possible due to the this business week cover:  Uh-Oh: Bonfire of the Builders.



>



Sources:
Mortgage Problems Continue to Hamper Pending Home Sales
NATIONAL ASSOCIATION of REALTORS, October 02, 2007
http://tinyurl.com/ysk3sh

Pending-Home Sales Decline
By JEFF BATER
October 2, 2007 11:54 a.m.
http://online.wsj.com/article/SB119133126337546349.html

Builders rally as bleak data inspire 'bottom' calls
By Greg Morcroft, MarketWatch
Last Update: 11:46 AM ET Oct 2, 2007
http://tinyurl.com/26lrsd

Pending home sales down 6.5% in August
Rex Nutting
MarketWatch, 10:10 AM ET Oct 2, 2007
http://tinyurl.com/2rwjmr

Tuesday, October 02, 2007 | 01:29 PM | Permalink | Comments (38) | TrackBack (1)
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Tracked on Oct 10, 2007 1:41:49 PM

Comments

Precisely what data point would cause the NAR to have a negative outlook?

I'm just happy to see their definitions unquestionably accepted by media outlets. We all know they're unbiased.

Did Yun get his degree online?

Posted by: Unsympathetic | Oct 2, 2007 1:38:47 PM

The comments to this entry are closed.



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