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Did The NAR Lie About August Pending Home Sales?

Data released today by the Mortgage Bankers Ass. suggest that housing demand is again cratering. In the last week of September mortgage purchase applications were down about 12% versus the same week last year. This is similar to the difference at the end of August, when the drop was about 13%.

Mortgage Applications Index Chart- Click to enlarge
Chart and data- Bloomberg

The data conflicts with the NAR’s report that pending home sales (sales contracts) were up 13% percent year to year in August. One of these organizations must have it wrong. Cash sales haven’t increased enough to make up for a 13% drop in mortgage applications.

Once again, there’s a suggestion that there’s something wrong with the NAR’s data. The NAR has previously revealed that its pricing data could not be trusted. Apparently neither can its volume data. This conflict between the mortgage applications data and NAR data on sales contract volume only raises more questions about the NAR’s objectivity and competence in reporting data in which the public has a critical interest.

In the meantime, I need to rethink my thesis that the housing market has at least stopped getting worse. If the latest data on mortgage applications is correct, then demand may again be falling off a ledge. The inventory to sales ratio which the NAR’s data had shown to be improving would again be worsening. That would translate to another ratcheting down in price.

So far that’s not showing up in the real time listing price data reported by The trend of this index has tended to correlate well with subsequently reported transaction prices. Nationally, prices are flat over the past month, and down just 1% since the June peak. If the indications of weaker demand are correct, sellers should soon begin to reflect that in their asking prices.


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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 


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