The National Association of Realtors released the October data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales slid for the fifth consecutive month in October."

WASHINGTON (November 30, 2022) – Pending home sales slid for the fifth consecutive month in October, according to the National Association of REALTORS®. Three of four U.S. regions recorded month-over-month decreases, and all four regions recorded year-over-year declines in transactions.

The Pending Home Sales Index (PHSI)*, www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, sank 4.6% to 77.1 in October. Year-over-year, pending transactions slipped by 37.0%. An index of 100 is equal to the level of contract activity in 2001.

"October was a difficult month for home buyers as they faced 20-year-high mortgage rates," said NAR Chief Economist Lawrence Yun. "The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain."

"The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November." (more here)

The chart below gives us a snapshot of the index since 2001. The MoM came in at -4.6%, up from a 8.7% decrease last month. Investing.com had forecast a decrease of 5%.

Over this time frame, the US population has grown by 17.4%. 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 42% below its all-time high. The population-adjusted index is 46% 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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