Diana Olick: Housing Double Dip a Done Deal

This is where it is going to get very interesting for this country

CNBC’s prescient real estate reporter has yet another timely article on the RE market. If only yours truly would have been so reliable (I apologize for not posting this earlier but it got left in my “Drafts” folder). She begins her article holding a little back:

Everybody take a nice long look at today’s Pending Home Sales Index from the National Association of Realtors, because it’s just about the last positive picture we’re going to see for a while.

Yes, the index rose even more than expected, as buyers rushed in to take advantage of the home buyer tax credit.

And yes, those numbers will show up in Existing Home Sales in May and June, but then look out [author’s emphasis].

Next she patiently explains the process:

This index is based on contracts signed in August, and that’s how the credit was set up; you had to sign your contract by April 30th and close by June 30th in order to get your $8000 if you’re a first time buyer and $6500 if you’re a move up buyer.

Then, POW!, the stunning conclusion:

And then came May, traditionally the height of the spring housing season [again, author’s emphasis].

Mortgage applications to purchase a home began to sink. Now, four weeks later, mortgage purchase applications are down nearly 40 percent from a month ago to their lowest level since April of 1997. Yes, you can argue that a larger-than normal share of buyers today are all cash, but those are largely investors.

That means real organic buyers are exiting in droves[once again, author’s emphsis].

“With another week of historically low mortgage rates, the trend from the prior three weeks continued, as refinance applications increased while purchase applications dropped. Purchase applications are now almost 40 percent below their level four weeks ago, while the refinance share, at 74 percent, is at its highest level since December,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

I know this is getting monotonist, but it is going to be hot summer.


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