Wide consensus on pending home sales
One of the challenges facing the housing market is determining a market consensus for home sales before the numbers are released. The federal new home sales report, due out Tuesday, and the National Association of Realtors' pending home sales report, due out Friday, offer a gauge of economic momentum. Americans are typically very confident when more and more are buying homes. Preferably, clear consensus makes managing residential property portfolios easier as market fundamentals are locked into homebuying. However, economists and investment banks alike fail to reach a precise consensus on the latest weekly home sales. Market commentators at Econoday see tomorrow's new home sales as hitting somewhere between 285,000 to 320,000 units. That's a broad range when considering the consensus stands at 300,000. Société Générale expects more retrenchment than Econoday. The number of new homes going to contract probably fell by 4.3% to a seasonally adjusted annual rate of 287,000 in April — a touch below the first quarter average of 294,000. That's an estimation that is nearly outside of the wide consensus listed above. "While the number of dwellings on the market is expected to slide by 2.2% to a record low of 279,000 during the reference period, the stock of unsold homes liked edged two ticks higher to 7.5 months’ supply," write the SocGen analysts. The estimate for pending home sales is rosier. "The recent uptrend in home-purchase mortgage applications suggests that the number of existing dwellings going to contract likely rose by 2.1% in April, boosting the cumulative increase since January to 8.1%," SocGen writes. "Our projection, if realized, would be consistent with existing home purchases climbing to a seasonally adjusted annual rate of 5.43 million in the National Association of Realtors’ May report – the strongest selling pace since the corresponding period of 2010." However, analysts at JPMorgan (JPM) say the lagging numbers, while hard to precisely quantify and not inspiring much confidence, are not leading to a downgrade in price expectations. "Existing-home sales disappointed but are still above the 2009 pace; the current pace of just over 5 million annual sales suggests home prices will decline another 6% from here, and bottom in 2012," write fixed income strategists for JPMorgan in the latest Securtitized Products Weekly report. "However, we are not shifting our view on home prices more negative unless existing home sales start to drift below 2009 levels," they add. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.