US pending home sales fell 8.7%MoM in December. November was also revised downward. Pending home sales, an early indicator for final existing home sales, are now 8.8% lower than in December 2012.
This is a nasty surprise, that is probably partly explained by adverse weather conditions in December. It is unclear however to what extent bad weather explains sales weakness. A few bits of good news are that mortgage rates have stabilised since December, and the number of mortgage applications has also recovered to pre-December figures. There is therefore some ground to believe that today’s plunge in pending sales is a one-off that will party be reversed in the coming months. Still, it is very clear that the housing bonanza of late 2012 and early 2013 is over. The Fed’s tapering is not without consequences, and the housing market is shifting in a lower gear.