ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

Follow us on

Content Channels

Most Popular This Month

Most Popular This Year

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%.

Pending Home Sales

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.

Pending Home Sales Growth

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.

Pending Home Sales Growth


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