what are pending home sales?

tracked by the national association of realtors (nar), pending home sales is one of many leading indices that are widely accepted as a representative index of the us housing market

• in particular, the pending home sales index records the number of sales or contracts that are signed, but not yet closed (transaction-wise)

• this can be useful because it usually takes up to two months for the contract to close, so the index can potentially be an indicator of future existing home sales, which is closely tied with the health of the overall economy

first month-over-month increase in a while

released last friday at 10am (numbers representing december 2022):

• the index increased 2.5% from november, which is the first month-over-month increase since may

  • the index has been decreasing for the past 6 consecutive months

  • northeast and midwest posted monthly reductions, while the south and west posted monthly gains

• year-over-year though, all four regions saw decreases in transactions, with the overall index down 33.8% compared to december 2021

“likely over”

• lawrence yun, chief economist at the nar, as expected, points to rising mortgage rates as the primary reason home sales have been on the decline for so long

• however, with mortgage rates on a decline recently and the market expecting the fed to likely stop raising rates in the near future, he says: "this recent low point in home sales activity is likely over"

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