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Economy in Brief

U.S. Pending Home Sales Slump in November
by Sandy Batten  December 28, 2016

The National Association of Realtors (NAR) reported that pending home sales fell 2.5% m/m (-0.4% y/y) in November after having edged up only 0.1% (not revised) in October. These sales are reported as an index with 2001=100. The November reading of 107.3 was 6.7% below the April peak, but 39.2% above the June 2010 low. The NAR noted that the recent rise in mortgage rates and the continued lack of inventory were likely the primary factors behind the November decline.

Pending sales were generally weak last month across the country. They edged up 0.6% m/m (5.7% y/y) in the Northeast, but fell both monthly and yearly in the other three regions. Pending sales declined 2.5% m/m (-2.4% y/y) in the Midwest, fell 1.2% m/m (-1.3% y/y) in the South, and plunged 6.7% m/m (-1.0% y/y) in the West.

The pending home sales index is constructed to be analogous to the new home sales data from the Census Bureau. It measures home sales when the sales contract is signed, as are new home sales. In contrast, existing home sales are recorded when the sale is closed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity parallels the level of closed existing home sales in the following two months. The series dates back to 2001, and the data are available in Haver's PREALTOR database.

Pending Home Sales (%, SA) Nov Oct Sep Nov Y/Y 2015 2014 2013
Total -2.5 0.1 1.4 -0.4 7.5 -3.3 4.6
Northeast 0.6 0.4 -1.6 5.7 8.0 -0.4 6.2
Midwest -2.5 1.5 -0.2 -2.4 6.8 -5.7 10.5
South -1.2 -1.3 1.6 -1.3 6.5 -1.4 5.5
West -6.7 0.7 5.0 -1.0 10.0 -5.9 -3.8
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