Blue skies ahead, or is the housing market falling off a cliff?

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People who track the housing market got a dose of data whiplash this week.

At 9 a.m. on Tuesday the SP CoreLogic Case-Shiller index showed the housing market cooling for the 11th straight month. An hour later, the National Association of Realtors released its pending home sales report showing a spike in signed contracts.

So, which is it? At the most critical time of year for the housing market – the onset of the spring buying season – is demand falling off a cliff or picking up speed?

Economists say go with pending home sales, considered a “leading indicator,” because Case-Shiller tracks prices as a rolling average over three months, making it a “lagging indicator.” The home-price data SP released this week reflects the market as it existed in December, January and February, when the housing market was in a slump.

Case-Shiller provides critical information to economists tracking the housing market, but it fails as a snapshot of current conditions when there’s a game-changer like March’s plunge in mortgage rates, said Mark Zandi, chief economist of Moody’s Analytics. The monthly U.S. average for a 30-year fixed mortgage in March was the lowest in more than a year, according to Freddie Mac data.

“Pending home sales are a real-time barometer of the market, and what that report shows is a housing market that’s on the mend at a key time,” Zandi said.

More than half of U.S. home sales take place in the March through June or July period as families try to be in their new location before the start of the school year in September.

NAR’s pending home sale index is, as its name suggests, based on signed contracts, and you can’t get more immediate than that, said Chris Low, chief economist with FTN Financial in New York. The NAR report showed contracts to purchase previously owned homes gained 3.8% in March as mortgage rates fell, pulling more people into the market. Signed contracts typically show up in data reports as completed home sales a month or two later – the time it takes for buyers to get a mortgage and close the deal.

“The most important thing to understand is: Housing really suffered last year,” Low said in an interview. “By this summer, data will be clearly showing that the spring season was an improvement.”

The Case-Shiller index showed home prices in 20 U.S. cities decelerated for the 11th straight month. The 3% gain from a year earlier was the smallest increase since 2012. The numbers reflect the housing market malaise that worsened near the end of 2018 as the economy cooled and mortgage rates rose above 5%, said Low.

“In recent weeks, with interest rates down, we’re beginning to see signs of a turnaround in the home sector,” he added.

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