- Schork Oil Outlook: Nat Gas Bulls Didn’t Stand A Chance
- Farr: An Extended Period—No Fat Lady in Sight
- Schork Oil Outlook: More Strength in Crude
- Pociask: In The Electronics War Does The Consumer Really Win?
- Busch: G20 Affirms Weak Dollar
- What Stocks to Buy Amid Health Care Overhaul: Strategist
- Tamminen: Why Does Oklahoma Want To Drown New York?
- Stimulus II? Jobs Tax Credit=Cash For Clunkers
- Busch: It Ain't All Bad News
- Keith Bergelt: The Case for Market Based Patent Reform
MOST SHARED
- How the Droid and Google Threaten the GPS Makers
- Wal-Mart Holiday Forecast Light, Profit Beats
- CNN Anchor Lou Dobbs Says He is Leaving Network
- Rising Jobless Biggest Threat to World Trade: WTO
- HPQ to Acquire 3Com
- Shopping for Answers
- Highest State Foreclosure Rates
- Pricier Beer Helps AB InBev Operating Profit
- Obama Most Powerful Person in World: Forbes
- APEC Pledges to Back 'Market-Oriented' Currencies
- Warren Buffett Ranked #14 On Forbes 'Most Powerful People' List
- What to Expect From Disney Earnings?
- HP's Shot Across Cisco's Bow
- USC Football Blog Leads All-Access Space
- Clowning Around At Work
- Ahead of Earnings Disney Restructures Studio
- Nov. 11: Unusual Volume Leaders
- 3 'Clear Sailing' Mid-Caps For Investors: Strategist
- Intimate Apparel Sales Heating Up: Maidenform CEO
- US Will Borrow Less as Banks Pay Back Funds: Geithner
- Wal-Mart Holiday Forecast Light, Profit Beats
- US Mortgage Refinancing Up; Buying Demand Sinks
- Kohl's Profit Higher than Expected, Same Store Sales Up
- Rising Jobless Biggest Threat to World Trade: WTO
- United Tech to Buy GE Security Unit for $1.82 Billion
- Gold Hits $1,122, Barrick Chief Says Selloff Possible
- Wall Street Pay Is Often too High: Bill Gates
- Morgan Stanley Gets Aggressive in Luring Brokers
RSS FEED
CNBC Guest Blog
Text Size 
This was a very good sign for the US housing market and for the credit crunch. June pending home sales (PHS) rose a surprising 5.3% vs expectations of a decline of 1.0%. The National Association of Realtors said that the index was lead by a 9.3% jump in sales in the South. This increase wipes out last month's decline and should mean that existing home sales (EHS) for July/August show gains.
PHS are essentially the leading indicator the housing market. These sales include homes, condos, and co-ops. The biggest complaint about EHS is that it counts only closings and that these closings occur many months (2-4) after buyers decide to purchase. PHS tracks contracts that are signed and awaiting closing.
We're all trying to figure out a bottoming process for the housing market. This is how it works:
1. Foreclosures and inventories of unsold homes begin to build up as sales decline.
2. Prices begin to fall as no one is buying. Builders stop getting permits and decrease starts.
3. Prices fall until we begin to find a level that buyers will step in and buy.
4. Prices may continue to fall until the inventory of unsold homes is reduced to more normalized levels (Five months).
5. Home prices stabilize when inventories are reduced and then prices of derivative products like mortgages and CMOs become attractive.
The increase in PHS is #3 in this process and this is why guys like Roubini and Syron think we're only half way through the price decline process. It will all come down to the speed at which inventories decline. Let's see what July EHS on August 25th looks like and how fast inventories decline with an increase in sales. I think this will happen faster than most expect and we could be normalized (Five months) by November. Remember, the YOY numbers will improve dramatically starting in September.
________________________
 |
Data is a real-time snapshot *Data is delayed at least 15 minutes