Pending home sales dip in August

The latest pending home sales figures were just released, and they showed a 1.2% drop between July and August. That was the second monthly decline in a row and it left the seasonally adjusted index at 88.6, the lowest since April. Sales fell 2.4% in the West, 3.7% in the Midwest, and 5.8% in the Northeast. Sales rose 2.6% in the South.

We already knew the new home market slipped to a multi-month low in August. Now, it appears we're seeing the same deterioration in the "used" home arena. While mortgage rates remain historically low, buyers simply lack the confidence to step up to the plate and buy homes. They're worried about losing their jobs, and rightfully so. As a result, housing continues to act like an anchor around the neck of the economy, preventing a meaningful recovery.

New home sales slump to six-month low

We just got new home sales figures for August, and they were nothing to write home about. Sales fell 2.3% to a seasonally adjusted annual rate of 295,000 from 302,000 a month earlier. That was roughly in line with the average forecast of analysts polled by Bloomberg.

The number of homes on the market continued to sink, hitting 162,000 last month. That's the lowest level in the history of the U.S., and roughly 6.6 months of supply at the current sales pace (in line with the last several months). Too bad it didn't do anything to support pricing - median home prices fell 7.7% on a yearly basis and 8.7% from a month earlier. At $209,100, new home prices are the lowest since last October.

A weakening economy, falling consumer confidence, and tighter credit standards are all weighing on housing demand. New home sales fell to a six-month low in August, with declines in three out of four regions of the country. Pricing was also weak, despite there being an extremely low level of new homes for sale. That's proof positive that competition from a glut of existing, "nearly new" homes is still weighing heavily on the market. Bottom line: The hunt for that elusive, long-lasting housing bottom continues!

Existing home sales pop in August

We just got existing home sales figures for August, and they were definitely better than expected. Sales rose 7.7% on the month to 5.03 million at a seasonally adjusted annual rate. That was the highest in five months and above the average forecast of 4.75 million. Single-family sales gained 8.5% while condo and coop sales rose 1.8%.

There was broad-based regional strength, with sales up 2.7% in the Northeast, 3.8% in the Midwest, 5.4% in the South, and 18.3% in the West. The number of homes for sale dipped 3%, while the months supply at current sales pace indicator of supply fell to 8.5 from 9.5. The median price of a home fell to $168,300 from $171,200 in July. That was also down 5.1% from a year earlier.

Sales of existing homes topped expectations in August, with widespread regional strength and a nice decline in inventory. That's the good news. The bad news is that these are lagging figures -- they reflect contracts signed a month or two prior. Other leading indicators of housing demand, including builder optimism and mortgage activity, point to future weakness. In fact, home purchase loan demand just fell to the lowest level since February.

Long story short? Housing isn't falling off a cliff. But it's not recovering either. That lack of a recovery, in turn, is impeding the broad economy's emergence from the Great Recession.

Starts slip in August

The latest housing starts figures just hit the tape. Starts fell 5% to a seasonally adjusted annual rate of 571,000 in August from 601,000 a month earlier. That missed expectations for a reading of 590,000. On the flip side, building permits rose 3.2% to a 620,000 SAAR from 601,000. That was slightly above forecasts for a reading of 590,000.

Starts fell 1.4% in the single-family market and 13.5% in the multifamily arena. They were up 2.2% in the West and 2.6% in the Midwdest, but down 3.3% in the South and 29.1% in the Northeast. As for permits, they rose 2.5% in single-family and 4.5% in multifamily. Permits were up in most of the country -- 3.3% in the Northeast, 6.3% in the Midwest and 11.3% in the West. They fell 1.3% in the South.

The housing market continues to muddle along, with little net progress. Builder optimism, mortgage applications, sales activity and now, construction activity, all remain mired near their recent lows. In August, for instance, construction activity slipped to a three-month low -- off almost 6% from a year ago. Permitting activity was a bit better, but still a few hundred thousand units below what you would call healthy. In other words, the patient has a pulse, but it sure isn't a strong one!