Do you remember the point back in 2007, when the housing market was at its absolute bottom? Remember the panic, sense of doom, and the realization that maybe, just maybe the economy was in for a steep fall? Well, we just posted numbers lower than that low. The question is, how low can we go? Pending home sales numbers were released today, and they were nothing short of disastrous. The Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 11.6 percent to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5 percent below a cyclical peak of 111.5 in April 2010 when buyers were rushing to beat the contract deadline for the home buyer tax credit. Some analysts feel April's numbers may reflect some environmental phenomena unrelated to the housing market. “The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” said Lawrence Yun, NAR chief economist. “The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims.” Yun said tight credit is the primary long-term factor holding back the market. “No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow,” he said. “Lenders and bank regulators need to be mindful of the historically low default rates among mortgage borrowers of the past two years. A robust economic and housing market recovery cannot occur as long as banks continue to hold onto huge cash reserves.” This is a bit of a familiar theme, isn't it? Unemployment is sky-high, yet corporate America is flush with cash and unwilling to invest in new hires. Taxpayers bailed out banks, only to see those same banks hold trillions in cash, unwilling to lend and grow the housing market (and with it, the entire economy). At some point, banks will have to realize that they have a social duty to the taxpayers who bailed them out, and reinvest that money into America. The entire rationale for the bailout of the banks was that their failure would doom the economy. Well, for anyone who lives in a house, the economy is pretty terrible. Banks? They're doing pretty awesome. Funny how that works out...again.
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