Housing Doom Housing Bubble Blog

Annoyingly, the Pending Home Sales Report from the National Association of Realtors read like a junior high algebra problem- no mention of this month’s actual index number, just relative percentages.

The Pending Home Sales Index, based on contracts signed in June, was 5.0 percent higher from the downwardly revised May index of 97.5, but is .6 percent below June 2006 when it stood at 112.0.  This 5.0 percent monthly gain is the largest in more than three years, since a 6.1 percent increase in March 2004.

While yes, I can do the math, we’ll just turn to Yahoo Finance who said:

The trade group’s index of pending home sales rose to 102.4 in June, up from a downwardly revised figure of 97.5 in May. Wall Street had been anticipating a slight decrease, as analysts surveyed by Briefing.com forecast a decline of 0.6 percent from the original May number of 97.7.

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Many thanks to M for our early sales preview for Phoenix home sales. 

According to ARMLS this morning, sales and listings for July were as follows:

Active                      54,227
Under Contract          5,399
Sold                         4,686

Remember that agents have a couple of days to get their sales in, so it is expected that the sales figure will creep up slightly. Also recent difficulties in the mortgage market may increase the percentage of pendings not closing, which may affect future sales.

According to ARMLS, 6093 properties sold in April of last year, so July 2007 sales will probably end up lower by around 20% YOY.  This probably will be the slowest July since 2001, when  5638 homes sold. [The earliest year for which I have data.] 5439 properties sold in June 2007, so it looks like the MOM decline could be significant as well.
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Early this morning a Bloomberg article proclaimed Subprime Defaults Blamed for Corporate America Earning Setbacks :

Railroads, chemical producers and insurance companies are blaming the worst U.S. housing slump in 16 years for their earnings woes.

Burlington Northern Santa Fe Corp., the second-biggest U.S. railroad, said lower shipments of housing products and lumber reduced second-quarter earnings. DuPont Co., the third-largest chemical maker, said slumping demand for kitchen and bathroom countertops was partly responsible for its profit drop. Genworth Financial Inc., the former insurance unit of General Electric Co., said earnings will be at the “lower end” of its forecast this year as mortgage-insurance claims increase.

“The subprime slime is oozing,” said Gary Shilling, president of A. Gary Shilling & Co. in Springfield, [New Jersey, who correctly predicted the recession in 2001. “As home equity evaporates, that takes out the foundation of strong consumer spending growth, which has been the mainstay of the economy.”

Now while I believe that the 2007 subprime meltdown has caused all kinds of havoc with the economy, there are still other important things to consider.  For all the problems in subprime, there’s a limit to what subprime can affect. 

On Monday, Paul Farrell of Marketwatch asked an interesting question:

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