Are they blowing smoke?
From the news wire at Marketwatch, an index of sales contracts on previously owned US homes fell 4.7% in May from April 2008 was reported by the National Association of Realtors this morning.
The index, considered a leading indicator of existing-home sales, was down 14% from the May 2007 level. By region, May’s pending home sales index fell 7.1% in the South, followed by drops of 6% in the Midwest, 2.9% in the Northeast and 1.3% in the West.
If there is a consensus among financial experts, both here at The Flip Board and abroad, that the overall housing market has not yet reached a bottom, then can you explain why groups like National Association of Realtors continue to report numbers like these? Are they simply chronicling the rise and fall of a market? Or are they trying to manipulate sentiment about the overall market? Or, do these individuals have nothing better to do since they are not selling homes?
NAR expects existing-home sales of 5.31 million in 2008. Also, NAR also sees the aggregate median existing-home price falling 6.2% to $205,300 this year. For investors, we have to remember that adustable rate mortgages have another round of adjusting this summer. Also, we investors have to pay attention to individual markets and areas almost autonomously as we look for deals. These numbers are nice conversation pieces, but unless your business is buying real estate in all markets at once, this information does you and your business very little service.
