U.S. Housing Market to Get Uglier in Near Future

Summary from the article:

Pending home sales ... counts how many contracts were signed rather than how many sales actually closed that month. ... This morning, the National Association of Realtors (NAR) released its Pending Home Sales Index for November, an indication of the direction of actual sales to be reported for December and January. This index for November fell to the lowest level since May 2014 ...

...

And the index plunged 7.7% compared to November last year, the biggest year-over-year percentage drop since June 2014.

Nevertheless:

"There is no reason to be concerned," the report said, reassuringly. And it predicted "solid growth potential for the long-term."

Later:

And this is a true and huge problem: Home prices have shot up for years, even while wages ticked up at much slower rates. At some point, the market is going to run out of people with median incomes who are willing to stretch to the limit to buy a starter shack, and the market is going to run out of people with high incomes who are willing to stretch to the limit to buy a median house.

We in the US want housing to solve all sorts of self-inflicted economic ills: our lack of savings; our inability to sacrifice in the short term and plan for the future; our longing to live an unsustainable lifestyle promoted non-stop in mass and social media; the homelessness problem; the fraying social contract.

As some point it will become apparent how counterproductive policies promoting home ownership were. In the meantime, the economic distortions on the upside and downside will continue.