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 an uptick in existing inventory helped lift contract signings in June. “After two straight months of pending sales declines, home shoppers in a majority of markets had a little more success finding a home to buy last month,” he said. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”

According to Yun, the good news is that it is possible the worst of the supply crunch affecting most of the country has passed. Last month, existing inventory was up on an annual basis – albeit slightly – for the first time in three years1. Furthermore, pointing to realtor.com® data on year-over-year changes in inventory in June, several large metro areas saw big jumps in active listings, including Portland, Oregon (24 percent), Providence, Rhode Island (20 percent), Seattle (19 percent), Nashville, Tennessee (17 percent) and San Jose, California (15 percent). (more here).

The chart below gives us a snapshot of the index since 2001. The MoM came in at 0.9%, up from a 0.5% decrease last month. Investing.com had a forecast of 0.4%.

Pending Home Sales

Over this time frame, the US population has grown by 15.6%. 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 16% below its all-time high in 2005. The population-adjusted index is 24% 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.