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Economy in Brief

U.S. Pending Home Sales Jump in June
by Sandy Batten  July 30, 2019

The National Association of Realtors (NAR) reported that pending home sales rose a larger-than-expected 2.8% m/m in June (+1.6% y/y) on top of a 1.1% m/m gain in May. This was the highest reading for the index since December 2017. Meanwhile, mortgage rates continue to decline. The effective rate on a 15-year fixed-rate mortgage fell to 3.54% in June, the seventh consecutive monthly decline and the lowest level since September 2017, from 3.85% in May. The declining trend in interest rates has had a positive impact on housing activity. Pending sales are up 9.7% since the four-and-a-half year low reached last December.

The June increase was widely spread across every major region. Pending sales rose 2.7% m/m (0.9% y/y) in the Northeast, increased 3.3% m/m (1.7% y/y) in the Midwest and edged up 1.3% m/m (1.4% y/y) in the South. They surged 5.4% m/m (2.5% y/y) in the West following declines in each of the previous two months.

The pending home sales index measures sales at the time the contract for the sale of 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 precedes the level of closed existing home sales by about 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) Jun May Apr Jun Y/Y % 2018 2017 2016
Total 108.3 105.4 104.3 1.6 104.7 109.1 109.8
   Northeast 94.5 92.0 88.9 0.9 92.4 97.1 96.4
   Midwest 103.6 100.3 96.8 1.7 100.2 104.9 107.4
   South 125.7 124.1 124.0 1.4 121.6 123.9 123.0
   West 96.8 91.8 93.5 2.5 92.3 99.5 102.3
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