The National Association of Realtors released the December data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales fell in December, denoting two straight months of declines."

WASHINGTON (January 27, 2022) – Pending home sales fell in December, denoting two straight months of declines, according to the National Association of Realtors®. All four major U.S. regions posted both month-over-month and year-over-year drops in contract activity.

The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 3.8% to 117.7 in December. Year-over-year, transactions decreased 6.9%. An index of 100 is equal to the level of contract activity in 2001.

"Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options," said Lawrence Yun, NAR's chief economist. "Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers." (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -3.8%, down from a 2.3% decrease last month. Investing.com had forecast a decrease of 0.2%.

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Over this time frame, the US population has grown by 16.9%. 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 currently 10% below its all-time high. The population-adjusted index is 17% 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.