9:15 PM » Lawler: Comments on Pending Home Sales and All Cash Purchases
A couple of notes today from housing economist Tom Lawler: NAR on Pending Home Sales Index in the West --- We Know Already In one of last week's reports I highlighted how the National Association of Realtors' Pending Home Sales Index for the West region (not seasonally adjusted) was inconsistent both with the pattern of closed sales in the West and with local realtor/MLS reports from that region. It turns out that the NAR is "aware of the fact that (their) pending data in the West does not look correct," and they are going through their records to see if they can figure out why. The NAR argues, however, that the YOY trend changes look fine, and "line up" better with other reported data. From my perspective, if the underlying, unadjusted data are wrong, I'd be leery of the YOY trends as well. As such, analysts are cautioned not to place much weight in the PHSI until the NAR fixes the underlying data. HMDA Data on Mortgage Originations Suggest All-Cash Share Peaked in 2011 HMDA data show that the number of purchase mortgage originations by HMDA reporters in 2013 was up 13.6% from 2012. HMDA purchase mortgage originations in 2012 were up 13.1% from 2011. In both years the percentage increase in the number of purchase mortgage originations modestly exceeded the percentage increase in estimated total home sales. That was in stark contrast to the previous six years, when the number of purchase mortgage originations fell relative to the estimated number of home sales - with especially steep relative declines from 2008 to 2011. These data suggest that the "all-cash" share of home sales hit an annual high in 2011, but still remained unusually high last year.