The National Association of Realtors released the July data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales declined for the second consecutive month in July, and for the eighth time in the last nine months."

WASHINGTON (August 24, 2022) – Pending home sales declined for the second consecutive month in July, and for the eighth time in the last nine months, according to the National Association of REALTORS^®. Three out of four major regions registered month-over-month decreases, though the West notched a minor gain. Year-over-year, all four regions saw double-digit percentage slides, the largest of which occurred in the West.

The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, slid 1.0% to 89.8 in July. Year-over-year, pending transactions sank 19.9%. An index of 100 is equal to the level of contract activity in 2001.

"In terms of the current housing cycle, we may be at or close to the bottom in contract signings," said NAR Chief Economist Lawrence Yun. "This month's very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity." (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -1.0%, up from a 8.9% decrease last month. Investing.com had forecast a decrease of 4.0%.

Over this time frame, the US population has grown by 17.3%. 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 32% below its all-time high. The population-adjusted index is 37% 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.

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