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Pending Home Sales Should Be Higher than Expected

The NAR is scheduled to report May pending home sales today and the consensus is expecting a rise of 1% MoM from April:


Yet, according to my friend, Christophe Barraud, Chief Economist and Strategist at Market Securities and also the best forecaster of US statistics since November, pending home sales should increase by 5.5% MoM in May:


Regarding this index which helps to forecast existing home sales, 30 to 45 days in advance, I anticipate a sharp increase. According to my estimate, in order for the pending home sales in adjusted value to be stable from April to May, raw data should increase 8.0% YoY. Nevertheless, local data that I gathered show a rise of 13.9%. Indeed, even if pending home sales decreased in some areas like in Arizona (-13.6%), they increased in other places like in New York (24.2%). After seasonal adjustment, pending home sales should increase by 5.5% MoM.


This forecast is coherent with articles which show strong pending home sales in some regions:
- Massachusets (all time high)
- Twin Cities (8-year high)

- Washington (3-year high)


As I said before, one of the main explanation of this surge could be the rebound in inventory.

Corelogic Data Shows Existing Home Prices Increased by 12.1% YoY in April

According to Corelogic data, house prices, including distressed sales, rose 12.1% YoY in April, up from 10.9% in March. It was the biggest year-over-year gain since February 2006 and the 14th consecutive increase.
Corelogic index is a 3-month moving average and is not seasonally adjusted.


The report gave more details:

“Home prices, including distressed sales, increased by 12.1 percent in April 2013 compared to April 2012. The rise in the Corelogic Hpi was the biggest year-over-year gain since February 2006 and the 14th consecutive increase in home prices. Excluding distressed sales, home prices increased by 11.9 percent year over year.
On a month-over-month basis, home prices increased by 3.2 percent in April compared to March data. Since March 2005, month-over-month gains have been at or above 2% just five times, with all occurring in the last year. Excluding distressed sales, home prices were up 3 percent month over month in April 2013.
Despite double-digit gains in April, home prices nationwide remain 22.4 percent below their peak, which was set in April 2006. Home prices, excluding distressed sales, were still 16.3 percent below their peak. Distressed sales is composed of short sales and real estate owned (REO) transactions.”


Finally note that the trend should continue in May as the CoreLogic Pending HPI indicates that May 2013 home prices, including distressed sales, are expected to rise by 12.5% on a year-over-year basis from May 2012 and rise by 2.7% on a month-over-month basis from April 2013.
This report supports Zillow forecast which is very optimistic regarding April Case Shiller 20 figures that will be published on June 25. According to Zillow,  the April 20-City Composite Case-Shiller Home Price Index (NSA) will rise 12.1% on a year-over-year basis and the seasonally adjusted month-over-month change from March to April will be 1.7%.