The NAR reports pending home sales dropped 30%. This was due to the end of an 8,000 tax credit.
The Pending Home Sales Index, a forward-looking indicator, dropped 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff comes on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.
While this was expected, the 15.9% below May 2009 is the number to look at. Even more interesting while NAR reports:
The data reflects contracts and not closings, which normally occur with a lag time of one or two months. However, many closings have been delayed recently from a rush of buyers into the system and slow processing of short sales, in addition to the heavy volume and a more thorough loan underwriting process. As many as 180,000 buyers who signed contracts by April 30 may have missed the June 30 closing deadline for the tax credit.
The reality is Congress passed an extension of the homebuyer's tax credit, yet to be signed into law. CBS MarketWatch:
To qualify for the federal tax credit of up to $8,000, a buyer needed to sign a contract on the home by April 30 and needed to close on the sale by June 30. Congress passed legislation on Wednesday to give buyers until the end of September to close on the sale, after realtors and other groups complained about delays in closings.
construction spending also dropped 0.2%, but private new construction dropped 0.5%. Government construction helped reduce the decline.
Lodging dropped -3.9% and -62.1% for the year. Total construction is down -8.0% for the year.