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Pending Home Sales "Lift Off" in April, Highest in Over a Decade

May 26, 2016

by Jill Mislinski

This morning the National Association of Realtors released the April data for their Pending Home Sales Index. "The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets," according to Lawrence Yun, NAR chief economist. "The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market." (more here). The chart below gives us a snapshot of the index since 2001. The MoM change came in at 5.1%. Investing.com had a forecast of 0.6%.

Pending Home Sales

Over this time frame, the US population has grown by 14.0%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

Pending Home Sales Growth

The index for the most recent month is 8% below its all-time high in 2005. The population-adjusted index is 16% off its 2005 high.

Pending versus Existing Home Sales

The NAR explains that "because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two." Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.

Pending Home Sales Growth


For additional perspectives on residential real estate, here is the complete list of our monthly updates: