The first hard data on the condition of the post-free-government-money housing market came with today’s release of May pending home sales from the National Association of Realtors and the picture isn’t a pretty one – pending home sales plunged by some 30 percent from the month before. This report in Bloomberg has the details:
The drop was the biggest in records dating to 2001 and compared with a 14 percent decrease forecast in a Bloomberg News survey of economists.
The decline shows that the industry at the center of the financial crisis remains vulnerable in the absence of government support. A stabilization in housing will depend on gains in incomes and employment that may stem foreclosures and give Americans the confidence to start buying again.
“Demand will be pretty depressed in the next few months,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “We’re still going to have a big overhang of foreclosures. There’s potential for prices to slow down a lot more.”
Forecasts for the decline ranged from 4 percent to 25 percent, according to a Bloomberg News survey of 36 economists. Sales rose 6 percent in April.
Now there’s a real shocker – not a single one of the 36 economists polled by Bloomberg saw a 30 percent decline coming. What won’t they see coming next?