Fritz Pfister

You know technology is a wonderful thing, when it works. This morning, of all mornings the association of Realtors website was down. That prevents my reporting of sales data from the end of business on Friday. Not to worry, the final numbers aren’t due to the association until Wednesday. So I’ll have June, second quarter, and first half 2010 final numbers next week.

However this I can tell you, because I monitor activity daily. The number of closed sales in June came in below my expectations, and were only up by 6% midday yesterday. The median sale price was up for the month and up by 1.6% through the first half of the year. I predicted the first half would finish with closed home sales up by around 20% over the first half of 2009. At last check sales were up by 12.6% in the first half.

The number that I have been keeping a close eye on, and the one that should be most important to homeowners, is the number of sales pending. At last check yesterday afternoon there were only 287 for the month down 33.3% from last June. There were only 299 in May down over 32%. May and June sales pending compared to March and April were down 49.7%.

Sales pending are the indicator for future closings. The decline in sales was expected and predicted to follow the expiration of the tax credits. How long the slowdown will continue is anybody’s guess, or even if this may become the new norm for the number of sales. Who knows but a June with fewer than 300 sales pending is unprecedented. The preceding five years in June, the low was 415 in 2008, and a high of 506 in 2007. There were 433 in 2009.

For over a year I have said our housing market will be impacted by jobs, and so it has. There’s no other explanation why sales would be this low in the face of record low interest rates and affordable prices. Shiller of the Case Shiller report out of Yale wrote this week that jobs were the most important factor to the housing market. That existing home sales were in a double dip recession and new construction a near depression across the nation.

There’s little hope for job creation on the horizon with tax increases imminent, rules for massive pieces of health care, and financial reform legislation still being drafted, all causing uncertainty for businesses. This point was driven home in a Wall Street Journal editorial by Carnegie Mellon University Professor of Economics Allen Meltzer, titled “Why Obamanomics Has Failed: Uncertainty about future taxes and regulations is enemy No. 1 of economic growth.” Funny, that’s about what Curtis Dubay Senior Tax Analyst of The Heritage Foundation said on my radio program last fall.

The unemployment rate fell in June to 9.5%, but not due to more jobs being created, but because 632,000 people quit looking for work. Initial claims for unemployment rose 13,000 last week and continues to run over 450,000 new claims weekly.

The good news is that when sales fall, demand slowly builds. We call that pent up demand. With two months under our belts following the tax credits expiring we may see a slight bump in activity after the Fourth of July holiday, softening a little in August, then a final bump in September. It looks as if Realtors will close about 65% to 75% the number of homes in the second half of the year as compared to the first half. Interest rates will be the driving force to home sales.

In other disappointing news this week the consumer confidence index fell to 52.9 wiping out all the gains for the year. A reading of 90 means a solid economy, and a reading of 100 or higher means economic growth. As goes consumer confidence goes consumer spending which accounts for 70% of America’s economic activity.

Looks like it’s going to be a long slog back to recovery, putting people to work, and growth as long as government continues its current policies on taxation, regulation, and spending. Taxes, regulation, and (deficit) spending are not the antidotes for the economy, they are the poison.

Do not be dismayed home sellers. We will continue to sell homes, not at the pace we normally would expect, but homes will continue to sell. The challenge for you who must sell is how you decide to sell, and with whom you shall trust to sell your home. Make good business decisions and you will succeed. A good Realtor, and experienced agent is worth their weight in gold during markets like today. Make poor business decisions and you will see why.

Make it a great week from Fritz & Kristie Pfister and The Pfister Success Team Inc. at RE/MAX Professionals of Springfield. Serving the families of the Springfield area since 1987 in all types of markets with selling systems proven to get homes sold. It would be an honor to serve you, call us at 652-7653.

The opinions expressed here are solely those of Fritz Pfister, or identified sources, and not those of RE/MAX Professionals of Springfield, or RE/MAX International.

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