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Economy in Brief

U.S. Pending Home Sales Rebound in August
by Sandy Batten  September 26, 2019

The National Association of Realtors (NAR) reported that U.S. pending home sales rose a larger-than-expected 1.6% m/m in August (+2.5% y/y) following a 2.5% m/m decline in July. Meanwhile, mortgage rates continued to decline. The effective rate on a 15-year fixed-rate mortgage fell to 3.40% in August from 3.54% in July, the ninth consecutive monthly decline and the lowest level since November 2016. This declining trend in interest rates has had a positive impact on housing activity. Pending sales are up 8.7% since the four-and-a-half year low reached last December.

The August increase was spread across all major regions with each region experiencing both a monthly and an annual increase. The gains were particularly strong in the West where pending sales increased 3.1% m/m (8.0% y/y) in August. Pending sales rose 1.4% m/m (0.7% y/y) in the Northeast, edged up 0.6% m/m (0.2% y/y) in the Midwest and rose 1.4% m/m (1.8% y/y) in the South.

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, which is a month or two later. Accordingly, 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 one to 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) Aug Jul Jun Aug Y/Y % 2018 2017 2016
Total 107.3 105.6 108.3 2.5 104.7 109.1 109.8
   Northeast 94.3 93.0 94.5 0.7 92.4 97.1 96.4
   Midwest 101.7 101.0 103.6 0.2 100.2 104.9 107.4
   South 124.4 122.7 125.7 1.8 121.6 123.9 123.0
   West 96.4 93.5 96.8 8.0 92.3 99.5 102.3
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