This morning’s utter collapse in pending home sales – a 6-sigma miss by ‘economists’ unaware that it was cold in December – has been ushered away on the back of “weather” reasoning. However, a glance at the chart below confirms this is total bullshit. As Goldman Sachs admits “broad-based declines by region suggest that colder-than-average weather was likely not the primary driver.”
(h/t @Not_Jim_Cramer )
Via Goldman Sachs,
Pending home sales dropped 8.7% in December (vs. consensus -0.3%), the largest decline since the expiration of the first-time homebuyer tax credit in 2010. Sales declined in the Northeast (-10.3%), West (-9.8%), South (-8.8%), and Midwest (-6.8%).
The broad-based declines by region suggest that colder-than-average weather was likely not the primary driver, given slightly warmer-than-average temperatures on the Pacific coast in December.
Although a noisy series, the December weakness in pending home sales is an unfavorable indicator for near-term existing home sales, and follows disappointing new home sales already released for the month.
So, if it wasn’t the weather… could it be that fast-money has left the bubble and what is left of the real-money mortgage-paying homebuyers are all that remains?