Pending home sales fall in November

We just got the latest pending home sales figures from the National Association of Realtors. The figures show that in November ...

* Pending home sales dropped 2.6% from October, compared to expectations for a monthly decline of 0.7%. That said, the October change in the pending sales index was revised UP to a 3.7% gain from the 0.6% previously reported.

* On a year-over-year basis, the seasonally adjusted sales index was down 19.2%. It's also down 31.1% from its April 2005 peak, though up 2.5% from its August 2007 low (to date).

* Sales dropped in three out of four regions -- down 13% in the Northeast, down 4.1% in the Midwest, and down 2.1% in the West. Sales rose 2.3% in the South.

The best thing you can say about pending home sales is that they aren't getting much worse, if you take October's revision into account. Whether we've seen the elusive "bottom" for housing is the question on everyone's lips. My sense is no. The downturn of the past two years occurred DESPITE a relatively healthy labor market. Now, even that potential crutch has been cast aside. Throw in tighter lending standards, weak consumer sentiment, and a dramatic overhang in inventory, and I think you have the recipe for ongoing trouble in housing. We probably have at least one more weak spring selling season in store, followed by a stronger showing in 2009.