Yet another important economic statistic confidently predicted to rise has fallen — hard.
This time it was June's pending sales of existing homes. Just in time for summer, they were predicted to increase by a seasonally adjusted 1.0 percent to 1.5 percent. Instead they fell by 1.8 percent, the steepest drop since December 2013. Additionally, May's original 0.9 percent increase was revised down to 0.6 percent. This brought out yet another appearance of the dreaded "U-Word" ("unexpectedly") — accompanied, as usual, by excuses delivered by Victorial Stilwell at Bloomberg News (bolds are mine):
Pending Sales of U.S. Existing Homes Unexpectedly Declines (sic)
Fewer Americans signed contracts in June to buy previously owned homes, representing a pause in the housing market’s momentum.
The index of pending home sales unexpectedly fell 1.8 percent, the first drop this year, after a revised 0.6 percent increase in May that was smaller than initially reported, figures from the National Association of Realtors showed Wednesday in Washington. The median forecast of 37 economists surveyed by Bloomberg called for a 0.9 percent gain. (Note: The 1.0 percent to 1.5 percent cited above came from Yahoo's Finance's calendar. — Ed.)
The data are consistent with the slow improvement in housing, restrained by still-tight lending standards and a limited selection of available properties. An easing of those conditions, along with an acceleration in wage growth, would allow more Americans to take advantage of cheap borrowing costs and provide more of a tailwind for real estate.
“There’s still ongoing demand for housing,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, who projected a drop in contract signings. The report “just tells us that sales have been roughly unchanged for the last couple of months, but the trend is still broadly positive.”
As to the bolded text about current conditions: Gee, I wonder why they exist?
"Still-tight lending standards?" Say hello to Dodd-Frank, which has lenders looking over their shoulders, afraid that federal regulators will shake their finger at any deal with any kind of special circumstance.
"Limited selection of properties"? How about "limited economic opportunity," thanks to six years of post-recession economic malaise? A large portion of homes on the market are, in normal times, offered by people who want to move up to a better home, often a new one. With economic growth artificially constrained by Keynesianism on steroids, out-of-control regulations and pervasive uncertainty, economic mobility has take an big hit. So of course there aren't as many homes on the market as there would be in a less-controlled situation.
At least Bloomberg's Victoria Stilwell recognized that "accelerated wage growth" has yet to occur, a sharp contrast compared to the Associated Press, where "solid hiring" has turned into virtual meme — never mine that household incomes are still below where there were before the recession.
As to Ryan Wang's comment above, he's got a serious problem with math if he really thinks that a 0.6 percent increase in May and followed by a 1.8 percent decline in June is "roughly unchaged for the last couple of months." In the real world, that's a far from insigificant 1.2 decline.
As usual, Stilwell's report fails to even raise the possibility that government policies had any influence on yet another "unexpectedly" negative result.
Cross-posted at BizzyBlog.com.
