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Economy in Brief

U.S. Pending Home Sales Decline Sharply
by Tom Moeller  September 27, 2017

The National Association of Realtors (NAR) reported that pending home sales fell 2.6% (-2.6% y/y) during August to an index level of 106.3 (2001=100). That followed an unrevised 0.8% July decline, falling to the lowest level since January 2016. It was the sixth monthly shortfall this year and left sales 6.4% below the peak during April 2016.

Pending home sales declined m/m across each region of the country. The index for the Northeast fell a sharp 4.4% (-4.1% y/y) to the lowest level since late-2015. In the South, the index declined 3.5% (-1.7% y/y), off 8.2% from the March peak. The index for the Midwest fell 1.5% (-3.2% y/y) to the lowest level since January. The index for the West eased 1.0% (-2.4% y/y), but remained up sharply since early this month.

The pending home sales index measures home sales when the sales contract is signed, analogous to the new home sales report. 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, 2001=100) Aug Jul Jun Aug Y/Y % 2016 2015 2014
Total 106.3 109.1 110.0 -2.6 109.8 108.8 101.2
Northeast 93.4 97.7 98.0 -4.1 96.3 90.7 83.9
Midwest 101.8 103.3 104.0 -3.2 107.3 107.1 100.3
South 118.8 123.1 125.2 -1.7 122.8 123.0 115.5
West 101.3 102.3 101.7 -2.4 102.5 102.4 93.1
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