Don't Buy Realtors' Weather Excuse
I said it before, and I'll say it again, you can't blame home sales, for now at least, on the weather.
Today the National Association of Realtors reported an unexpected 7.6 percent monthly drop in its Pending Homes Sales Index in January.
Remember, this index measures contracts signed, not closings, so this is people shopping in January who put in an offer, got the offer accepted, and signed on the dotted line in January.
The Realtors' report is headlined: "Pending Home Sales Down; Severe Weather Impacting Market"
That headline would suggest that severe weather impacted January sales, and the usual housing analysts have since noted that in all their reports.
I say that's hooey, and I have the proof!
First, from the Realtors themselves:
“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit," writes NAR Chief Economist Lawrence Yun. "Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.
Okay, so he's saying the tax credit should have pushed sales higher in January and the severe weather hampered shopping in FEBRUARY.
Well I called over to WSI, a Weather Channel company that tracks how weather affects various business sectors.
WSI's Chief Meteorologist Dr. Todd Crawford sent me the following:
- After a cold start, temperatures during the second half of the month moderated significantly. For January as a whole, US temperatures were very close to normal.
- Regionally, the Northwest had its 5th warmest January on record, while the Central, South, and Southeast regions were significantly colder than normal.
- An intense series of storms impacted the West Coast with flooding rains and hurricane-force winds on the 21st/22nd
- A large winter storm brought significant snow and ice to the southern U.S. on the 28th through 30th, affecting areas from New Mexico to the Atlantic Coast. Vast stretches of the interstate were forced to close, impacting commerce. Reports of snowfall over 10 inches and ice over 1 inch were widespread
In summary, January was not particularly notable compared to February.
Thanks to WSI and Dr. Crawford.
So a pretty normal January, but for one West Coast storm for two days and a big East Coast storm that didn't happen until the very end of the month.
February, on the other hand, saw unreal severe winter weather on the east coast (I still have snow on my lawn), and that will likely hurt sales in the region.
I would, however, like to pre-emptively point out that the Northeast is actually the smallest home sales region by volume.
Questions? Comments? RealtyCheck@cnbc.com