Pending Home Sales Rose in June, Better Than Forecast

This morning the National Association of Realtors released the June data for their Pending Home Sales Index. Here is an excerpt from the latest press release:

Lawrence Yun, NAR chief economist, says the bounce back in pending sales in most of the country in June is a welcoming sign. "The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs," he said. "Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria."

Added Yun, "Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago." (more here).

The chart below gives us a snapshot of the index since 2001. The MoM change came in at 1.5%. Investing.com had a forecast of 0.7%.

Pending Home Sales

Over this time frame, the US population has grown by 14.6%. 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 21% 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