Economist's Commentary: September 8, 2008

Quick Take on the Economy: September 9, 2008

By Lawrence Yun, NAR Chief Economist

Pending home sales or contract signings to buy a home fell 3 percent in July after having risen 6 percent in the month prior.
Even with the decline, the nationwide activity has been fairly stable for nearly a year.
Some markets are seeing near doubling in activity from one year before, while many middle-America markets are down 10 to 20 percent.
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Wholesale trade fell 0.3 percent in July - a very small decline after several months of 1 to 3 percent monthly gains. A fall in motor vehicle trade was the reason for the decline.
Wholesale activity is up 16 percent from one year ago, which is quite robust.
Wholesale inventory rose, but the inventory-to-sales ratio remains very tight at 1.07. It had averaged 1.15 in the prior 5 years.

Contract signings for homebuying fell due to very tight lending criteria imposed by Fannie and Freddie. But with the federal government takeover and backing, the underwriting standards will return to more normal conditions and drive down the cost of obtaining a mortgage.
Economic growth could slow, but will continue to expand and not contract. Tight inventory conditions assure more need for production and inventory restocking.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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