Pending Home Sales Down 10.6% in February

This morning the National Association of Realtors released the February data for their Pending Home Sales Index. Here is an excerpt from the latest press release:

The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, dropped 10.6% to 110.3 in February. Year-over-year, contract signings fell 0.5%. An index of 100 is equal to the level of contract activity in 2001.

"The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record-low inventory," said Lawrence Yun, NAR's chief economist." (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -10.6%, down from a 2.4% decrease last month. Investing.com had forecast a decrease of 2.6%.

Over this time frame, the US population has grown by 16.6%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

The index for the most recent month is currently 15% below its all-time high. The population-adjusted index is 22% off its high.

Pending versus Existing Home Sales

The NAR explains that "because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two." Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR's assessment that their pending sales series is a leading index.