The National Association of Realtors released the January data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales slumped in January, continuing what is now a three-month drop in transactions."

WASHINGTON (February 25, 2022) – Pending home sales slumped in January, continuing what is now a three-month drop in transactions, the National Association of Realtors® reported. Of the four major U.S. regions, only the West registered an increase in month-over-month contract activity. All four regions posted a decline in year-over-year 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 5.7% to 109.5 in January. Year-over-year, transactions decreased 9.5%. An index of 100 is equal to the level of contract activity in 2001.

“With inventory at an all-time low, buyers are still having a difficult time finding a home,” said Lawrence Yun, NAR's chief economist. (more here).

The chart below gives us a snapshot of the index since 2001. The MoM came in at -5.7%, down from a 5.1% decrease last month. Investing.com had forecast an increase of 1.0%.

Over this timeframe, 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.

The index for the most recent month is currently 18% below its all-time high. The population-adjusted index is 23% 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.