Pending home sales chart courtesy of Trading Economics and the NAR

Pending Home Sales Description

Pending sales are signed contracts where the transaction has not closed. They are a leading indicator of future existing home sales. 

In this case, pending home sales for November represents an advance look at closings that will take place in December or January.

Note that existing home sales are reported at closing whereas new home sales are recorded at signing. 

Pending Home Sales Slid 4.0% in November

The National Association of Realtors reports Pending Home Sales Slid 4.0% in November

Pending home sales slid for the sixth consecutive month in November, according to the National Association of REALTORS^®. All four U.S. regions recorded month-over-month decreases, and all four regions saw year-over-year declines in transactions.

"Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home," said NAR Chief Economist Lawrence Yun. "Falling home sales and construction have hurt broader economic activity."

The Pending Home Sales Index (PHSI) — a forward-looking indicator of home sales based on contract signings — fell 4.0% to 73.9 in November. Year-over-year, pending transactions dropped by 37.8%. An index of 100 is equal to the level of contract activity in 2001.

Pending Home Sales in the United States decreased 37.80 percent year-on-year in November of 2022. That is the 18th straight month of year-over-year declines. 

The NAR will report existing-home sales for December on January 20, 2023. Don't expect the report to be any good. 

Inevitable Rebound?

Nar chief economist (cheerleader) commented "With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth."

There eventually will be a rebound but not in the coming months based on interest rates.

30-year Mortgage Rates 

30-year mortgage rates courtesy of Mortgage News Daily, annotations by Mish

Existing Home Sales Decline 10th Month, Down Another 7.7 Percent

On December 21, I noted Existing Home Sales Decline 10th Month, Down Another 7.7 Percent. 

Existing home sales collapsed starting February when rates hit the 4 percent level. Today the rate is 6.5 percent down from a peak of 7.2 percent. 

That is not enough to revive the housing market unless prices crash. So far, prices remain stubbornly high.

Home Prices Sink in Every Major Market, What About Year-Over Year?

On December 27, I noted Home Prices Sink in Every Major Market, What About Year-Over Year?

The top is in, but declines do not yet make up for the huge rise in interest rates. 

What About Credit?

In case you missed it please see my discussion of money supply and credit in Is Inflation Always and Everywhere a Monetary Phenomenon?

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