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Economy in Brief

U.S. Pending Home Sales Decline Despite Lower Mortgage Rates
by Gerald D. Cohen  May 30, 2019

The National Association of Realtors (NAR) reported that pending home sales fell 1.5% in April (-2.0% year-on-year), reversing some of March's 3.9% gain. Meanwhile, mortgage rates continue on their downtrend. The effective rate on a 15-year fixed-rate mortgage declined to 3.95% in April, the lowest level since the beginning of 2018. The declining trend in interest rates has had some positive impact on housing activity. Pending sales are up 5.7%, since the four-and-a-half year low reached at the end of last year.

The number of signed contracts in April declined in every region of the country except the Midwest. Pending sales dropped 2.5% in the South (-1.8% y/y), and fell 1.8% in both the Northeast and West (-2.1% and -1.5% y/y respectively). Meanwhile activity increased 1.3% in the Midwest (-2.4% y/y).

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 anticipates 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. Mortgage interest rates from the Mortgage Bankers Association can be found in the SURVEYW database.

Pending Home Sales (SA, 2001=100) Apr Mar Feb Apr Y/Y % 2018 2017 2016
Total 104.3 105.9 101.9 -2.0 104.7 109.1 109.8
   Northeast 88.9 90.5 92.1 -2.1 92.4 97.1 96.4
   Midwest 96.8 95.6 93.2 -2.4 100.2 104.9 107.4
   South 124.0 127.2 121.8 -1.8 121.6 123.9 123.0
   West 93.5 95.2 87.5 -1.5 92.3 99.5 102.3
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