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Economy in Brief

U.S. Pending Home Sales Fall Again
by Carol Stone, CBE  September 27, 2018

The National Association of Realtors (NAR) reported that pending sales of existing homes fell again in August, dropping 1.8% after July's 0.8% decrease, revised from -0.7%. This latest move was the fourth decline in the last five months, taking the August sales index level down to 104.2 (2001=100) compared to 106.1 in July and off 2.3% y/y. A recent peak for these sales was 113.0 in April 2016, and the all-time high for this index was 127.0 in April 2005, during the housing "boom" before the Great Recession.

Pending sales fell in all four major regions of the country in August. The biggest decline was in the West, -5.9% to 89.1 from 94.7 in July, and down a sizable 11.3% year-on-year. In the Northeast, sales fell 1.3% in the month to 92.7, down 1.6% y/y. Sales in the South were off 0.7% to 121.3, with a year-on-year increase of 1.3%. In the Midwest, they edged down 0.5% to 101.6, pushing the y/y comparison to -1.1%.

The pending home sales index measures sales at the time the contract for an existing home is signed, analogous to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity parallels the level of closed existing home sales in the following two months. The series dates back to 2001, and the data are available in Haver's PREALTOR database.

Pending Home Sales (SA, 2001=100) Aug Jul Jun Aug Y/Y % 2017 2016 2015
Total 104.2 106.1 107.0 -2.3 109.0 109.8 108.8
Northeast 92.7 93.9 93.7 -1.6 97.2 96.4 90.8
Midwest 101.6 102.1 101.9 -1.1 104.8 107.4 107.1
South 121.3 122.2 124.2 +1.3 123.8 122.9 123.1
West 89.1 94.7 95.6 -11.3 99.6 102.4 102.2
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