The Pending home sales for December came out today and rosy is almost all you can say about them – not that you’ll find that in the headlines which read, “Pending Home Sales Down For December”, none the less, the numbers were staggeringly strong.
While true, sales were off 3.5% nationally month over month, and this is the lead sentence of every news report, what is equally true is that December’s Seasonally Adjusted (SA) number is the 2nd highest in 4 years. Let me repeat that so it really sinks in, December pending home sales were the second highest in 4 years. November was the highest (except for the tax credit months). Said Chief NAR economist Lawrence Yun, “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,”
A mortgage broker I work with asked me, “How is it that a couple months ago everything was garbage and now suddenly, everything is great?” The answer, I explained, was that things have been improving for months, but you had to be willing to accept it, which most folks were not prepared to do. (I blogged about accepting change last week if you’re interested…).
Now I wouldn’t be honest if I failed to mention the Non Seasonally Adjusted (NSA) numbers were somewhat alarming. If you’ve read my previous blogs on the Pending Home Sales, I tend to discount the SA numbers and focus more on the NSA but December’s NSA numbers were poor, down 21% nationally and 35% in the west. This is something that could just be an anomaly or a regular and predictable trend. I’ve requested annual percentage numbers from NAR to compare the multiyear trend for December. I’ll report back if it proves to be interesting. But since I don’t have those numbers handy, and this is my blog after all, this month I’m going to ignore the NSA and instead just focus on the positive, and act a little like Bullwinkle the talking moose. .. If you were American born, anytime after 1960, you probably remember the Rocky and Bullwinkle cartoon show. In it, there was always a little comedy bit snippet where Bullwinkle, would say, to Rocky, the talking squirrel, “Hey Rocky, watch me pull a rabbit out of my hat”. Rocky would say, “Not again…” and Bullwinkle would invariably pull out a ferocious lion or some such animal, and retort, “Looks like I grabbed the wrong hat” or “Time t get a new hat”, and that’s how I’m handling the NSA numbers this month, maybe it’s time to get a new hat.
There is another lesson to be learned from Rocky and Bullwinkle that I’d like to leave you with. At the end of every episode, there would be a big lightning storm that would destroy everything. The music was loud and violent. The show’s music would shift to a gentle piano and we would then see an empty field where, from the storm, a smiling sun would appear; sunflowers would begin rapidly popping out of the ground, ending with Rocky and Bullwinkle popping out too. So like the zany cartoon characters, we are experiencing the same. The numbers are great. Sales of existing homes are stabilizing and things are getting better. We are out of the storm and sunflowers are popping up everywhere and it feels pretty darn good.