So the headline wasn’t great: sales down month over month. National Association of Realtors economist, Lawrence Yun hung the blame on tight lending standards and lack of confidence, both of which are true. If that’s all you read or heard, you’d conclude this market stinks. But I actually looked at the Pending Home Sales Index (PHSI) chart NAR put out and I was surprised at what I found.
Obviously as a real estate agent in California I am specifically focused on the West numbers and those numbers were surprisingly strong. For example, August was the 3rd highest pending sales number in the past 12 months; that’s not bad. Moreover, it was up 8.4% Seasonally Adjusted (SA) year over year; that’s not bad either. More incredibly, it was the highest August in the past 4 years, save for 2009 which was in the middle of the Federal Tax Credit. And for the real kicker, the Non Seasonally Adjusted (NSA) number was a whopping 28% over last month. Nationally, that number is 9.4%. These numbers are nothing short of astounding.
I’m always curious about how easily numbers can be manipulated. When we look at inflation we are supposed to exclude the “volatile costs of food and energy”. I don’t think anyone but economists exclude food and energy in considering inflation. I know it factors into my monthly expenses. Thus when I looked at the Pending numbers yesterday, I considered the NSA numbers. It’s raw data. Just a total pending sales; no looking at what month it is; is it the selling season etc., etc… So when I saw the West’s rise of 28%, I fell out of my chair – that’s an insane number. That’s such a big number it blows my mind to think about it. 28%??
What that suggests to me is that in spite of what everyone is saying, including NAR, there is activity in this market and homes are selling. Sure prices are down, and many sellers are under water, but someone is buying. Numbers can be manipulated for sure, but in the end, numbers don’t lie.