United States Pending Home Sales
The Pending Home Sales Index is a leading indicator of housing activity. It measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. When a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Most pending home sales become home sale transactions, typically one to two months later. The National Association of Realtors collects pending home sales data from MLSs and large brokers.
Contracts to purchase previously owned homes in the United States fell significantly more than anticipated in November, plunging for the sixth consecutive month. This is the latest indication of the severe impact the Federal Reserve's interest rate hikes are having on the housing market as the central bank attempts to curb inflation.
- Pending home sales decreased for the sixth consecutive month, down 4.0% from October.
- Month-over-month, contract signings declined in all four major U.S. regions.
- Pending sales fell in all regions compared to one year ago.
The National Association of Realtors (NAR) reported that its Pending Home Sales Index, which is based on signed contracts, decreased by 4% to 73.9 in November from the downwardly revised reading of 77.0 in October. Year-over-year, pending transactions dropped by 37.8%. The figure for November was the lowest since NAR established the index in 2001, with the exception of a brief decline in the early months of the pandemic.
“Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said NAR Chief Economist Lawrence Yun. “Falling home sales and construction have hurt broader economic activity.”
Also Read: United States Existing Home Sales Trends
Pending Home Sales Regional Breakdown November 2022
Contracts declined in all four regions, led by a 7.9% drop in the Northeast. All four regions also recorded double-digit declines on a year-over-year basis, with contract signings in the West down by 45.7%, by far the largest regional drop. “The Midwest region — with relatively affordable home prices — has held up better, while the unaffordable West region suffered the largest decline in activity,” Yun said. The overall decline in signed contracts suggested that existing home sales would continue to fall after posting their 10th straight monthly decrease in November.
Pending Home Sales Trends in 2022
Here is the tabular data of pending home sales from November 2021 to November 2022. The units displayed are in thousands and are the seasonally adjusted annual rate.
Pending Home Sales Summary from June to October
Pending home sales in the US sank 8.6% MTM in June of 2022, after increasing 0.4% in May, and much more than market forecasts of a 1.5% drop, as escalating mortgage rates and housing prices impacted potential buyers. Pending sales retreated in all four major regions: Midwest (-3.8%), Northeast (-6.7%), South (-8.9%), and West (-15.9%).
Year-over-year, transactions shrank 20%. According to NAR, buying a home in June was about 80% more expensive than in June 2019. Nearly a quarter of buyers who purchased a home three years ago would be unable to do so now. "Home sales will be down by 13% in 2022 but should start to rise by early 2023", Yun added.
NAR released a summary of pending home sales data showing that July's pending home sales pace weakened by 1.0% last month and fell 19.9% from a year ago. The last time the index was that low was in April of 2020 during the pandemic, and the index was 71.6. Pending sales represent homes with a signed contract to purchase but which have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
All four regions showed double-digit declines from a year ago. The West had the most significant dip of 30.1%, followed by the South with a drop in contract signings of 20%. The Northeast fell 15.4%, followed by the Midwest with the smallest decline of 13.4%.
Pending home sales fell 2% in August as the housing market continued its slowdown amid rising mortgage rates and inflation, the National Association of Realtors reported on Wednesday. The drop was more than the forecast 1.5% decline and brings sales down 24.2% from a year ago. All four regions showed double-digit declines from a year ago. The West had the most significant dip of 31.3%, followed by the South with a drop in contract signings of 24.2%. The Midwest fell 21.1%, followed by the Northeast with the smallest decline of 19.0%.
Pending Home Sales Index, dropped for the fourth consecutive month in September, down 10.2% compared to August and a whopping 31% compared to a year earlier. NAR’s report also showed that all four major regions of the U.S. saw a sharp pullback in home sales, with pending home sales down about 27% or more on a year-over-year basis in each region. The West saw the largest yearly contraction in pending home sales, down 38.7% annually. However, the Northeast posted the largest month-over-month drop in September, with pending home sales down 16.1% compared to August.
October’s pending home sales pace weakened by 4.6% last month and fell 37.0% from a year ago. All four regions showed double-digit declines from a year ago. The West had the largest dip of 46.2%, followed by the South with a drop in contract signings of 38.2%. The Midwest fell 32.1%, followed by the Northeast, with the smallest decline of 29.5%.
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