Pending Home Sales Increase In September

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

“In addition to boosting traditional home building, we should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions, in order to meet the rising demand for new housing,” Yun said. (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at 1.3%, up from a 1.6% increase last month. Investing.com had forecast an increase of 0.9%.

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Over this time frame, the US population has grown by 16.2%. 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.

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The index for the most recent month is 14% below its all-time high in 2005. The population-adjusted index is 23% off its 2005 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.

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