Lawrence Yun, chief economist for the National Association of Realtors, comments in this video that the rise in pending home sales signals a recovery. He also notes that there is a disconnect between pending home sales and existing home sales mainly due to tighter underwriting standards for lenders and stricter appraisal guidelines.
I think he’s overlooking the obvious which is many of these pending home sales fall through because they’re short sales. While more contracts fall apart due to tighter lending standards and more stringent appraisal guidelines, what I’m seeing is that the majority are short sales falling through because they’re not being approved or the typical 3 to 6 month time for a response is not reasonable for most buyers.
While the chief economist for NAR is probably way smarter than I am, actually definitely smarter than I am, he’s probably never practiced a day of real estate in his life so maybe I’m seeing something he can’t see.
Nevertheless, I think we’re seeing a rise in home sales and reduction in inventory which should mean we’re headed for a recovery.