REIT - Pending Home Sales Dropped In September
Summary
- According to the National Association of Realtors, "Pending home sales trailed off for the fourth consecutive month in September."
- The index for the most recent month is currently 40% below its all-time high. The population-adjusted index is 44% off its high.
- A close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.
By Jill Mislinski
The National Association of Realtors released the September data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales trailed off for the fourth consecutive month in September."
WASHINGTON (October 28, 2022) - Pending home sales trailed off for the fourth consecutive month in September, according to the National Association of REALTORS®. All four major regions recorded month-over-month and year-over-year declines in transactions.
The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales , a forward-looking indicator of home sales based on contract signings, slumped 10.2% to 79.5 in September. Year-over-year, pending transactions slid by 31.0%. An index of 100 is equal to the level of contract activity in 2001.
"Persistent inflation has proven quite harmful to the housing market," said NAR Chief Economist Lawrence Yun. "The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers." (more here )
The chart below gives us a snapshot of the index since 2001. The MoM came in at -10.2%, down from a 1.9% decrease last month. Investing.com had forecast a decrease of 5%.
Over this time frame, the US population has grown by 17.4%. 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 currently 40% below its all-time high. The population-adjusted index is 44% off its 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.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
For further details see:
Pending Home Sales Dropped In September