Pending Home Sales Rise Marginally in June
July 27, 2016
by Jill Mislinski
This morning the National Association of Realtors released the June data for their Pending Home Sales Index. Lawrence Yun, NAR chief economist, said "With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring. Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth." (more here). The chart below gives us a snapshot of the index since 2001. The MoM change came in at 0.2%. Investing.com had a forecast of 1.4%.
Over this time frame, the US population has grown by 14.1%. 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.
The index for the most recent month is 13% below its all-time high in 2005. The population-adjusted index is 20% 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.
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