Economic Commentary

Pending Home Sales Fall 4% in November

Tuesday, January 06, 2009

The index of pending home sales fell 4 percent in November, the lowest level since 2001, indicating continued weakness in the housing sector heading into its fourth year of decline. Sales fell in all four regions. Sales were 7.2 percent lower in the Northeast, 6.7 percent lower in the Midwest. They also fell 2.4 percent in the West and 2.2 percent in the South.

The weak economic environment certainly continues to have an impact on residential home sales but tighter credit underwriting apparently is the catalyst for the latest result. This has led many to believe that there is still room for lower home prices.

Purchases of previously owned homes, which account for about 90 percent of the market, fell 8.6 percent in November. Median prices fell 13 percent from a year earlier, the biggest decline on record. New home sales, which account for the remainder, dropped to the lowest level in more than 17 years.

According to the Mortgage Bankers Association, one in 10 mortgage-holders fell behind on their mortgage payments or were in foreclosure during the third quarter. The share of mortgages 30 days or more overdue and the share of loans already in foreclosure both jumped to all-time highs in a survey that goes back 29 years.

Brian Turner
Director, Advisory Services

Review of This Week’s Key Releases:
Mon, Jan 5-	Construction Spending	Nov	-0.6% vs -0.4%r
Mon, Jan 5-	Domestic Vehicle Sales	Dec	7.8M vs 7.6M
Tue, Jan 6-	ISM Non-Manufacturing	Dec	40.6 v s 37.3
Tue, Jan 6-	Factory Orders	Nov	-4.6% vs -6.0%r
Tue, Jan 6-	Pending Home Sales	Nov	-4.0% vs -4.2%
Tue, Jan 6-	Dec. 16^th FOMC Minutes
Thu, Jan 8-	Consumer Credit	Nov Est	+3.7B vs -$3.5B
Fri, Jan 9-	Change in Nonfarm Payrolls	Dec Est	-475k vs -533k
Fri, Jan 9-	Unemployment Rate	Dec Est	7.0% vs 6.7%
Fri, Jan 9-	Wholesale Inventories	Nov Est	-1.1% vs -1.1%

Next FOMC Meeting:
Wed, Jan 28-	Fed expects inflationary pressures to moderate, is committed to the resumption of economic growth.
	Current target rate – 0.0% to 0.25%