From the Philly Inquirer:
Pending home sales in the eight-county Philadelphia area fell 14.7 percent in March from February, a downward trend that has been nearly uninterrupted since the subprime-mortgage meltdown began in August 2007.
By contrast, national pending sales rose 3.2 percent in March, thanks to huge numbers of foreclosure and short sales in the West and Florida at prices discounted as much as 50 percent, the National Association of Realtors reported yesterday. It was the second consecutive monthly gain in pending sales.
According to Prudential Fox & Roach HomExpert, which provides the local figures, pending sales in the Philadelphia region in March were 23.6 percent below the same month in 2008. Nationally, they were 1.1 percent higher than March 2008.
The real estate firm measures pending home sales with an index that is adjusted for seasonal variations. Although the index fell in March, the actual number of pending sales increased. Based on that rise, the index for April should be more positive, said Steve Storti, Prudential Fox & Roach senior vice president.
Nationally, there has been a tendency since the beginning of this year to read every positive sign in housing as signaling the end of the industry downturn. But NAR chief economist Lawrence Yun said, “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”
Has the housing bust hit bottom yet?
The latest encouraging data came on May 4, when the National Assn. of Realtors said its index of pending home sales rose 3.2% from February to March.
First of all, remember what pending means. These are homes that have gone under contract—but have not actually sold. The Realtors’ association says that based on historical data, the pending sales numbers do closely track future sales. But the correlation is much stronger in the year-over-year data than it is in the month-over-month numbers. The increase over March 2008 was much more modest, just 1.1%.
Another reason for caution is that the home sales recovery—if you can call it that—isn’t nationwide. Pending sales in the Northeast fell 5.7% from February to March. Meanwhile, much of the market—more than 40% of all sales nationally—is being driven by banks unloading foreclosed homes at distressed prices. Higher-end homes are not selling anywhere near as well as cheaper homes. That’s not an indicator of a truly healthy housing market.