From Florida Realtors: WASHINGTON – Oct. 28, 2013 –

Pending home sales declined for the fourth consecutive month in September. According to the National Association of Realtors® (NAR), higher mortgage interest rates and higher home prices curbed buying power.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, fell 5.6 percent to 101.6 in September from a downwardly revised 107.6 in August. Year-over-year, the index is down 1.2 percent compared to September 2012.

The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings. “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” says Lawrence Yun, NAR chief economist. “In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases. This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014,” says Yum. “Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year.”

My Comments:

I’m not a big fan of NAR economists. They’ve been known to fudge the numbers and put a happy face on negative situations. To confirm what I’m saying go back and read the past 7 years of NAR economist reports. And Google Lum’s predecessor. Simply stated, I do not trust their data or their analysis or interpretation. It is understandably biased.

But I’m particularly disappointed with the interpretation of the data. I can only speak to my areas of expertise in the Panhandle. I do not agree that declining affordability is responsible for the bulk of reduced contract activity.

My Analysis & Interpretation:

I believe it’s a combination of:

• seasonal influences (it’s always slower this time of year);
• economic concerns;
• nervousness from the health care debacle;
• investors backing off a bit and;
• most importantly the double digit rates of increase experienced the past 12-18 months;
• Nervous builders reducing new home prices to move inventory.

My interpretation and opinion is that the bottom of my market area was first quarter 2012. Since that time, I’ve seen double digit increases in the vacant lot sector, condominium sector and detached single-unit sector. From Panama City Beach to Destin. These rates of increase are unsustainable and frankly cause for concern.

Pending prices have declined for four consecutive months. That means it started in June. Well, historically June is a very good buying month. As is July. No, there’s something else going on here.

My opinion is it’s more about jobs. What is REALLY happening on the job front? Does anyone know?

And investors are backing off. Many purchases in past 18 months were cash.

Finally, one of the biggest factors in declining pending home prices may be over building. Builders are nervous. Check out the last few builder confidence surveys. Less confident.

Yes, government is one of the four factors that affect value. BUT not in the sense that Lum makes it out to be. And remember, this is the Fourth consecutive month. The government shutdown did not start in May or June. The brief government shutdown has not delayed closings that much. I get FHA and VA notifications and the most K’s have been affected are 60 days but predominately 30 days. I do agree with Lum’s analysis that uncertainty curbs major expenditures. However, I completely disagree with inventory shortages. At least not here. There’s plenty for sale and more to come. I do not believe we will continue to see home prices rise. They are stabilizing. Naturally, we’ll have the spring boom – as long as rates stay low – but stability is much more likely than increases in home prices. What about jobs? No mention of jobs? Market areas need PIE – population, income and employment to grow.

Folks, at the end of the day there are Four Characteristics of real property:

• Effective demand
• Utility
• Scarcity
• Transferability

And Four Factors that Affect Value:

• Physical
• Economic
• Social
• Governmental

Consider the above when making your real estate decisions – before you buy. Or call Mims.

I’m Bob. Bob the appraiser. Bob the broker. Bob the licenses RE instructor. Bob the consultant. Bob the expert witness.

And Bob knows what the heck he is talking about.

BBQ: I don’t think the market can keep going up. In the U.S., we see real estate not going up… houses are selling at lower prices. You can’t have anything going up 10 percent to 20 percent to 30 percent indefinitely. By Eli Broad

BLT: I heard it through the Grapevine by Marvin Gaye