Here’s a belated look at the quarterly total sales chart, updated to include Q2:
Still came in lower than any previous quarter—about 15% lower than last year. So far this quarter is off to a stronger start, with July sales coming in 11% higher than last year. It will be interesting to see if that holds for August and September.
Next, here’s another look at the monthly pending and closed sales chart, only this time I have split the pending sales onto separate vertical and horizontal axis to demonstrate the apparent two-month lag that has shown up in the data this year:
It used to be (from 2000-2007) that a given month’s closed sales were (on average) about 95% of the previous month’s pending sales. So far this year the relationship has been closer to a given month’s closed sales coming in at 78% of the total pending sales from two months prior.
Here’s one more chart, with pending sales, closed sales, and a plot of pending sales * 78%, shifted two months into the future:
If this relationship holds for August, it looks like we’ll see about 1,900 closed sales.
I wouldn’t read too much into July’s volume. It may or may not be a sign of the third quarter volume strength. It’s only one month and not that significant.
As to the pendings, I wouldn’t make anything at all of that. You like to focus on the rule change, I like to focus on short sales, but either way (it’s probably both), the pending sale data is pretty meaningless. And really does it matter? All you’re trying to do with the data is predict the next month’s closed sales, which as I noted in the first paragraph is not that significant of a piece of data.
RE: Kary L. Krismer @ 1 – The difference between pending and closed sales, and the time lag, probably aren’t that significant. The fact that the typical relationship between the two has, apparently, experienced a shift is likely just reflective of the number and nature of those short sales.
The trend in the number of closed sales though, could be significant (even if any individual month or quarter is shallow data in terms of making forecasts or conclusions). Home sales per time period (in more normal times, anyway) should reflect a fairly steady “life-events” shuffle which can be pressured upwards or downwards by speculation, easiness of credit, overall economic conditions, and (what is more important to my purposes) positive or negative expectations of house pricing.
It’s just speculation, but I think it is legitimate to guess that when closed-sales approach what seems to be a “stable average” in that 2000-2002 period, that we might be at the bottom in price declines.
I am seeing the buyer being very price sensitive. Sellers have tried to move prices up a little bit and the slight uptick in rates are affecting things. Short sales are still messing up the market. However the buyer’s fundamental values have changed from consumption to conservation and someone looking for an uptick in volumes I don’t think will see one. The buyer is not thinking in terms of market cycles now but life cycles. If you consider household aggregation and having the ownership period on a house go from 5 to 10 years overall we need a lot less houses than we have in the past and looking for volumes to go up probably by any meaningful amount will not happen I think in the next couple of years.
RE: Kary L. Krismer @ 1 – I agree; don’t read into these values too much. It’s just the natural trend of data happening. I’d personally like to believe that we’re in for something significant. But, I don’t don’t see that for years out. When you have a burst of any kind there’s lots of room for opportunity.
Any thoughts as to who and what types of people are currently buying properties?
Very helpful charts.
For some of your readers who may be red-green colorblind, it may be helpful if you can avoid having the color coding depend upon the ability to distinguish reddish hues from greenish hues, tho. The last couple of line charts do depend on this.
It’s not an issue for me, but it could be for a couple of friends.
-dydx
RE: dydx @ 5 – Thanks for pointing that out. I’ll try to keep that in mind for future charts.
RE: Justin Louie @ 4 – I’d agree the trends are important, but not the individual month’s data. What, for example, if June had been 70 more and July 70 less? Would that have really mattered? As I explained in the thread regarding the July data, my wife and I had two closings which could have fallen in either June or July (neither closed on the date scheduled).
As to the types of buyers, individual agents don’t really have a good feel for it because they see too little of the market.
justin louie @4 In my office over the last 4 months the average buyer with a mortgage is 15% down, 749 credit score, mostly Single Family , 425k avg sales price, 85% first time buyer, 10% move up, and the other 5% investment or 2nd home. 95% are some type of 30 year fixed mortgage, a few 5/1 ARMS. About Half are FHA with 3.5% to 5% down. total transactions are 125
Maybe sales jump, maybe they don’t, but with pendings trending down the overall trend is clear: more of the same- sales volumes that continue to erode from their 2005 highs.