I am really not understanding how the pending home sales number is so high. It slaps in the face all the other data I am seeing on housing.
Surprisingly Diana Olick may have an explination from ummm CNBC. Yeah I know, but she is one of the few talking heads on CNBC who continually warns not all is well in housing land.
I realize I'm not making friends with the Realtors by trouncing their index today, but I have to say honestly: I've read an awful lot of National Association of Realtor reports in my time on the housing beat (five years+), and never before have I seen them express so much skepticism in such a positive report. Remember, so many of you in the blogosphere refer to the NAR as the "shills" for the industry, which I supposed is what they're paid to be. But I digress.
So given a two-month lag time from contract to closing, you would expect that the Pending index would mirror the Existing sales numbers, that is, August Pendings would equal, give or take a few, October's Existings. The trouble is we are not in a normal market.
“The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” said NAR Chief Economist Lawrence Yun.
I followed up with the Realtors, asking just how many contracts they believe are failing to get to closing.
"We really don't know for sure, but it appears to have increased, particularly regarding HVCC [Home Valuation Code of Conduct-new appraisal rules]. Lawrence thinks it may be as high as a double-digit number that are being cancelled or postponed," NAR's Walter Molony wrote to me in response.
There is one possible explanation. I am not fully satisfied but it will have to do for now.