Pending Home Sales Rose 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:

“February’s pending sales figures show the housing market had been very healthy prior to the coronavirus-induced shutdown,” said Lawrence Yun, NAR’s chief economist. He noted that the data does not capture the significant fallout from the pandemic or the measures taken to control the outbreak. “Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year.”

“Housing, just like most other industries, suffered from the coronavirus crisis, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals,” Yun said. “Many of the home sales that are likely to be missed during the first part of 2020 may simply be pushed into late summer and autumn parts of the year.” (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at 2.4%, down from a 5.3% increase last month. Investing.com had forecast a decrease of 1.0%.

Over this time frame, the US population has grown by 16.0%. 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 12% below its all-time high in 2005. The population-adjusted index is 21% 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.