Real estate sales volume made national news headlines this week as pending home sales fell almost 6% in September, according to the real estate trade association.
Pending home sales are measured by the number of signed contracts in a month and not necessarily closed deals. The National Association of Realtors (NAR) reported pending home sales fell 5.6% in September, which marks the fourth month of consecutive decline.
Typically first tuesday does not report pending home sales numbers since it is an extremely unreliable metric. Any number of mitigating circumstances may arise to kill deals.
However, this time the trade association seems to have the bigger picture right. Where they usually argue from the point of view of supply, eager to maintain the illusion of scarcity, this time they are admitting that the problem is lack of real demand.
We hate to say, “we told you so” but we’ve been reporting on this market misconception for a while now. Let’s take a look at the numbers in California:
- the 30-year FRM averaged 4.45% in September 2013;
- buyer purchasing power sank to a miserable –10.33;
- September home sales volume showed a steady decline, down 15% from August; and
- as of August (our most recent pricing data) low-tier homes were priced 30% higher than a year earlier.
Incidentally, Inman news reports home prices nationwide are “14 percent off their bubble-era peak.”
The writing is on the wall. Our mini-bubble appears poised to pop.