People love to say the sky is falling whenever new real estate data comes out. Yesterday’s pending home sales release is no exception. Let’s run down the numbers and see if the haters are right.
PENDING HOME SALES (MAY 2019)
– 1.1% increase in pending home sales in May
– Year-over-year sales fell 0.7%
– 17th straight month of year-over-year decreases
WHY SHOULD I CARE?
It’s easy to look at a stat like 17 straight months of declines and worry about where home sales are headed, but let’s take a closer look.
Pending home sales show how many people are signing contracts to buy homes in a given month, so you can use it to estimate how many existing home sales will close in the following months.
There are two kinds of economic indicators—lagging and leading. Lagging indicators show us where the economy has been, and leading indicators like pending home sales show us where it’s going.
The last couple crucial leading indicators have had good news for home buyers and sellers.
– Homebuilders are building more homes, a sign of economic confidence.
– There are a sh*tload of job openings, which means businesses are hungry to hire and grow.
While pending home sales aren’t skyrocketing, they still rose in May, which tells us spring selling is still hot and summer is setting up decently.
Leading indicators generally start to consistently go sour a year or two before a recession. We’re not seeing that yet.
And if you have your heart set on buying a home, you’re not really deciding based on macro factors, are you?
No. You’re focused on your local market, the schools you want your kids to go to, and how sweet your upgraded kitchen will look.
That’s why we’re here to translate all this stuff for you so the haters don’t leave you twisted.
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