Factors driving decline in pending home sales are signs of healthier market

Looking beyond the weather as one of the factors behind December’s 8.8 percent annual decline in pending home sales, Calculated Risk’s Bill McBride sees other likely factors — fewer distressed sales, fewer “pending” short sales, and less investor buying — as “signs of a healthier market, even if overall sales decline.”

Even if 2014 existing-home sales fall short of the National Association of Realtors’ current forecast of 5.1 million homes, that would not be bad news if distressed sales continue to make up a smaller proportion of sales, McBride said.

Another likely reason for the decline in pending sales — inventory shortages — is not a sign of a healthier market, but many analysts predict that stable and rising prices in many markets will bring more homes onto the market as more homeowners get out from “underwater.”

Of course, McBride says, what “really matters for the economy and employment is new-home sales (not existing) and housing starts.” Source: calculatedriskblog.com.