Yesterday, the National Association of Realtors (NAR) released its Pending Home Sales Report for May showing a dramatic drop with the national index dropping 30% since April and 15% since May 2009 as the expiration of the governments housing tax gimmick worked to damage future selling activity.
It's fairly clear from these results that one of the untended consequence of the government's intrusion into the housing market has been to shift home sales from the future into the present leaving the future with less potential demand.
It's important to note that with the government's tax scam now complete and little chance for similar meddling for the foreseeable future, the weaker "organic" trends have now taken over.
Meanwhile, the NARs chief economist Lawrence Yun suggests that the decline was simply the expected outcome from "rational" behavior of housing consumers.
“Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June.”
Apparently Yun considers home "buyers" levering up a mountain debt on a deflating asset just in order to win an $8,000 freebie rational.
The following chart shows the national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).