Pending home sales faltered a bit in
September, like new home sales announced earlier this week, the decline ended a
four-month winning streak. The National Association of Realtors® (NAR) said
that its Pending Home Sales Index (PHSI) fell to 130.0, a 2.2 percent retreat
from the August level.
The index, based on signed contracts to
purchase existing single-family homes, townhouses, condominiums, and
cooperative apartment, fell in every region but the Northeast. However, it is
still 20.5 percent higher than in September 2019 and retained double digit
annual growth in all regional indices.
Analysts had expected the positive run to
continue. Those polled by Econoday were not universally upbeat, their forecasts
were, in fact, wild. They ranged from a 4.0 percent downturn to a 9.5 percent
increase. The Econoday consensus was for growth of 3.5 percent, while the
consensus from Trading Economics was 3.4 percent.
“The demand for home buying remains
super strong, even with a slight monthly pullback in September, and we’re still
likely to end the year with more homes sold overall in 2020 than in 2019,” said
Lawrence Yun, NAR’s chief economist. “With persistent low mortgage rates and
some degree of a continuing jobs recovery, more contract signings are expected
in the near future.”
“Additionally, a second-order demand
will steadily arise as homeowners who had not considered moving before the
pandemic begin to enter the market,” Yun said. “A number of these owners are
contemplating moving into larger homes in less densely populated areas in light
of new-found work-from-home flexibility.”
NAR says the home sales market has
recovered most dramatically, returning to, or even exceeding January
pre-pandemic levels in several metro areas. Leading the list are Seattle,
Boston/Cambridge, Los Angeles/Long Beach, Las Vegas, and San Jose/Sunnyvale.
Pending sales grew 2.0 percent in the Northeast to a PHSI
reading of 119.4. This is up 27 percent year-over-year. In the Midwest,
the index slid 3.2 percent to 120.5, but is 18.5 percent higher than the
The PHSI in the South declined 3.0
percent to 150.1 in September, an annual increase of 19.6 percent. Pending
sales were down 2.6 percent in the West, but at 116.8 the index was up 19.3
percent from a year ago.
The PHSI is based on a large
national sample, typically representing about 20 percent of transactions for
existing-home sales. In developing the model for the index, it was demonstrated
that the level of monthly sales-contract activity parallels the level of closed
existing-home sales in the following two months. Existing-Home Sales for October
will be reported on November 19.
An index of 100 is equal to the
average level of contract activity during 2001, which was the first year to be
examined. By coincidence, the volume of existing-home sales in 2001 fell within
the range of 5.0 to 5.5 million, which is considered normal for the current