The National Association of Realtors (NAR) will release their Pending Home Sales report today. The report will generate headlines and those headlines will seem in conflict with each other. The reason for the confusion is that there will be nuances within the report.
In order to truly understand the report, we must peel away the headlines and look at the facts and what has influenced them. First let’s explain what the report actually covers. According to the NAR web site:
The reason there will be confusion created by the media reports is actually simple to explain. There will be two different numbers reported:
Neither of these numbers will accurately show what is taking place in the real estate market. Let’s explain why: The Month-Over-Month ComparisonThe M-O-M compares pending contracts this month to last month. Analysts are predicting that the report will show a modest gain if any. iMarketnews.com said:
Year-Over-Year ComparisonThe Y-O-Y compares pending contracts this month to the same month last year. NAR says this is a better indicator of how the market is doing:
This number may look very ugly in the report. We must remember that last year buyers where rushing to get their homes into contract before the expiration of the original Home Buyers’ Tax Credit on November 30th. Obviously, contracts for the next couple of months will not compare favorably to the same months last year because there is no urgency created by a tax incentive this year. Bottom LineThere may be very negative news generated by the year-over-year numbers. Don’t get overly concerned. The reports will look bad because of the manipulation of the numbers by the tax credit. It will take several months before these reports can again be trusted. Homes ARE selling. Call or email me to get specifics about your area. 305-494-1616 |