Is U.S. Housing Market Stabilizing?
It's the first key economic report of the week. The National Association of Realtorsis out with its October report on pending home sales. CNBC’s Diana Olick reports on the data and here’s what she had to say on “Morning Call.”
The latest buzzword from the realtors is: stabilizing. The housing market--say the realtors, is stabilizing. The pending home sales index based on contracts signed in October slipped 1.7% to a reading of 107.2 and is 13.2% lower than October of 2005.
An index of 100 is equal to the average level of contract activity in 2001, which was when the realtors started doing this. FYI- this number is an indicator of what the existing home sales number will be for November. Remember existing home contracts get far fewer cancellations than new home contracts.
It seems like sales will be slipping again--part of the correction--but here's the stabilizing part--the slippage is narrowing. In September--the index was 13.6% below the previous year and in August it was 14% lower so there's been some ground gaining.
Now we've seen prices dropping steadily for existing homes. In October it was the largest year-over-year price drop since they started recording prices in 1968. When prices come down, more people start buying homes and that appears to be the case.
So--again the slide is continuing but sales are gaining some traction. Of course, remember, we are in the real estate dead zone come December. Not a lot of people buying homes when they're busy spending all their change on toys and Holiday goodies.