Earlier this week we had hints that the stellar (or crazy) run of price gains in US property was beginning to slow. Two more reports in the past two days have confirmed activity is dipping.
Yesterday, August new home sales missed consensus of 425k annualised:
“Sales of new single-family houses in August 2013 were at a seasonally adjusted annual rate of 421,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 7.9 percent above the revised July rate of 390,000 and is 12.6 percent above the August 2012 estimate of 374,000.”
There is a clear stalling now in the recovery. Chart from Calculated Risk:
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Today we got Pending Home Sales for August the NAR:
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, eased 1.6 percent to 107.7 in August from a downwardly revised 109.4 in July, but remains 5.8 percent above August 2012 when it was 101.8; the data reflect contracts but not closings. Pending sales have been above year-ago levels for the past 28 months.
Lawrence Yun, NAR chief economist, said the decline was expected following elevated levels of closed existing-home sales at the end of summer. “Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he said. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.”
The PHSI in the Northeast rose 4.0 percent to 84.8 in August, and is 5.1 percent above a year ago. In the Midwest the index declined 1.4 percent to 111.6 in August, but is 13.8 percent higher than August 2012. Pending home sales in the South fell 3.5 percent to an index of 116.9 in August, but are 3.7 percent above a year ago. The index in the West declined 1.6 percent in August to 106.9, but is 1.7 percent higher than August 2012.
Although total existing-home sales this year will be up about 11 percent to nearly 5.2 million, little change is seen in 2014, with sales forecast to increase less than 1 percent. The national median existing-home price should rise 11 to 12 percent for all of 2013, easing to an increase of 5 to 6 percent next year, with general improvement expected in inventory supplies.
That’s pretty dour stuff from the US’ primary realty spruiker. A soft landing from the recent surge is plausible given the low base and receding threat of tapering.
To underline that, bond yields are definitely looking double-toppy despite a little rise last night:
Remember that it is the Us long bonds that determine US fixed mortgage rates. For the time being, the jury is out on the US housing recovery.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
