Gigantic plunge in pending home sales in July
* Pending sales plunged 12.2% between June and July. That's the worst month-on-month decline the NAR has ever found (its data goes back to early 2001). It's also much, much worse than the 2.2% decline expected by economists.
* Pending sales fell in all four regions -- the Northeast (-12.2%), the Midwest (-13.1%), the South (-6.6%), and the West (-20.8%)
* On a year-over-year basis, the seasonally adjusted pending home sales index dropped to 89.9 from 107.1. in July 2006. That's a 16.1% decline. That leaves the index at its lowest level since September 2001, the month of the 9/11 attacks.
There are bad economic reports, and then there are truly awful ones. This one easily falls into the latter category. While I expected home sales to continue to weaken, even I'm surprised by the magnitude of this drop. Here's something else to consider: While the mortgage credit crunch started to gather steam in July, it got even worse in August. That suggests sales have probably slumped further from these depressed levels.
Bottom line: With housing inventory at a record high ... home sales falling ... mortgage credit getting tighter ... and job growth starting to slow, home prices are going to be under real pressure for the rest of this year and into 2008.