Talking about the December 2013 NAR Pending Home Sales Index, Q4 2013 GDP, and Jobless Claims…
Several things to cover today that could be cause for concern about the health of the economy and housing market. Hate to sound depressing but there is no denying the fall in the
NAR Pending Home Sales Index for December 2013
Earlier today, NAR released their Pending Home Sales Index for December 2013 and it was NOT good. As always, this measures homes under contract and not homes sold. In other words it is a forward looking indicator. In the past I have referred to it as counting your chickens before they hatch…
Let’s look at the highlights:
- The December 2013 Pending Home Sales Index fell 8.7% from the November 2013 level
- The December 2013 Pending Home Sales Index is 8.8% lower than the December 2012 level
- This is the lowest level since October 2011
Doesn’t sound too good does it?
As usual, NAR tried to put a positive spin on it. Lawrence Yun, NAR chief economist, said:
Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers. Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors.
Blame it on the weather? Come on people. Serious buyers are not going to let it being cold stop them. I have shown homes in the cold, in the rain, in 100+ degree temps. People that are serious about buying a home will look at homes even if the weather sucks.
Don’t believe me? Read No, The Plunge In Home Sales Was “Not” Due To Cold Weather
If I was going to blame something I would point to stagnant incomes, high unemployment, rising mortgage rates & home prices. And the lack of inventory too. But mainly I would point to stagnant incomes and unemployment.
Update: just found this article showing I am NOT the only person concerned about how Income Growth Is a Challenge for Housing
What do you think?
More bad news today as the Labor Department reported that the number of Americans filing new claims for unemployment benefits rose more than expected last week. The Labor Department said:
In the week ending January 25, the advance figure for seasonally adjusted initial claims was 348,000, an increase of 19,000 from the previous week’s revised figure of 329,000. The 4-week moving average was 333,000, an increase of 750 from the previous week’s revised average of 332,250.
Not good but remember I wrote yesterday about unemployment and what we really need to watch: Labor Participation Rate.
Q4 Gross Domestic Product
Today, the Bureau of Economic Analysis released the Q4 GDP numbers. They said real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.2% in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to their “advance” estimate.
This is the 2nd quarter of above average growth. So this great news for the economy and hopefully will continue into 2014.
The Take Away
I am NOT going to try to sugar coat that the NAR Pending Home Sales Index was good or that the weather caused it. Then again, look at how just 2-3 inches of snow shut Atlanta down this week. Since this is tracking homes under contract, we should see a drop in closed sales in about 45 to 60 days.
Jobless claims do worry me but since the report on GDP was good, maybe we can hope for improvements in the employment numbers soon.
Despite today’s somewhat negative news, I still think 2014 is going to be a good year for real estate and the economy. Well, that is IF the morons in Washington don’t screw anything up…