Pending Home Sales Down Marginally in June

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

WASHINGTON (July 29, 2021) – Pending home sales declined marginally in June after recording a notable gain in May, the National Association of Realtors® reported. Contract activity was split in the four major U.S. regions from both a year-over-year and month-over-month perspective. The Northeast recorded the only yearly gains in June.

"Pending sales have seesawed since January, indicating a turning point for the market," said Lawrence Yun, NAR's chief economist. "Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat. (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -1.9%, down from an 8.3% increase last month. Investing.com had forecast an increase of 0.3%.

Over this time frame, the US population has grown by 16.7%. 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 13% below its all-time high. The population-adjusted index is 21% 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.