Pending Home Sales Good, But Here's Reality Of It All
Another housing indicator today, and for a change the number was actually in the positive. Pending home sales, which is an index from the National Association of Realtors that measures the number of contracts signed each month (as opposed to closings, which is their Existing Home Sales monthly number) rose 5.3 percent in June after falling nearly 5 percent in May.
This would indicate that existing home sales may be improving. Okay, good news. But here comes the realism. It doesn't exactly mean housing has bottomed because there are a whole lot of ingredients in the soup that housing is in right now, and the bulk of them are still pretty bitter.
Prices for homes are still falling; in fact the CEO of Freddie Mac said we are only halfway through the price correction. Foreclosures are still rising, and Realtors even admit that foreclosed homes could account for 40 percent of existing home sales. And then there's credit. Mortgage rates are rising and Fannie Mae is now increasing fees on loans in markets where values are falling the most.
Of course Fannie and Freddie are the elephants in the rooms of today's housing markets. If the two giants that own or guarantee so many of or loans falter any more, that will only put yet another roadblock in the road to recovery. So here's to today's news of improving sales month to month (pending sales are still way down year over year). It's certainly a start. I'm just not sure where it's going.
Video: The CNBC housing panel breaks down today's pending home sales data.
Questions? Comments? RealtyCheck@cnbc.com