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Post by unlawflcombatnt on Apr 3, 2007 12:32:35 GMT -6
The markets continue to grasp at straws to find good news. Today the straws came from the housing industry, with some help from falling oil prices. According the Yahoo News article, Stocks surge on home sales data, the National Association of Realtor's index for pending sales of existing homes increased in February by +0.7 from a seasonally adjusted 108.5 in January to a 109.3 in February. However the index has declined 8.5% from February 2006's 119.4 down to 109.3 in February 2007. It appears the long-term trend is still down, and fairly sharply at that. The full story can be found at news.yahoo.com/s/ap/20070403/ap_on_bi_st_ma_re/wall_street
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Post by Grapple on Apr 4, 2007 6:24:28 GMT -6
The problem with “pending home sales” data is that it is pending and the deal has not gone through. Since the sub-prime mortgage market is crashing and the other lenders are tightening lending standards, I am betting that a lot of these pending sales will not go through. There is a similar problem with new and existing home sales data, every month these numbers come out but the next month they quietly revise them downward when sales fall through, even when deposits are put down people are finding that they have to give up the deposit since either they or the lenders don’t come up with the money to close the sale. So a temporary upward blip in “pending sales” means nothing unless the sales are actually completed and the money changes hands.
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Post by unlawflcombatnt on Apr 5, 2007 4:55:54 GMT -6
The problem with “pending home sales” data is that it is pending and the deal has not gone through. Exactly. The fraction of those "pending" sales that will actually go through is declining all the time. In addition, these "pending" sales are base on a survey that only includes roughly 20% of the market. There is a similar problem with new and existing home sales data, every month these numbers come out but the next month they quietly revise them downward when sales fall through, even when deposits are put down people are finding that they have to give up the deposit since either they or the lenders don’t come up with the money to close the sale. So a temporary upward blip in “pending sales” means nothing unless the sales are actually completed and the money changes hands. Right you are. As you've stated (and as I can document), the previous home sales numbers are revised downward over 90% of the time. I've noticed this trend for at least 2 years (when I started copying down the original numbers and saving them to my computer.)
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