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Economy in Brief

U.S. Pending Home Sales Unexpectedly Fall in September
by Winnie Tapasanun  October 29, 2020

• Pending home sales fall for the first time since April.

• Sales drop in all the major regions except in the Northeast.

Pending home sales fell 2.2% (+20.5% y/y) in September, the first m/m fall since April, after an 8.8% rise in August, according to data released by the National Association of Realtors (NAR). The index level was at 130.0 (2001=100) in September, down slightly from 132.9 in August but up meaningfully from a recent trough of 69.0 in April.

Pending home sales slid in most of the major regions of the country. Sales in the Midwest dropped 3.2% (+18.5% y/y) in September, reversing an 8.6% gain in the previous month. Sales in the South fell 3.0% (+19.6% y/y) following an 8.9% rise. Sales in the West declined 2.6% (+19.3% y/y) after a 12.7% advance. These monthly drops were the first since April. To the upside, sales in the Northeast rose 2.0% (27.7% y/y) after a 4.3% increase, registering the fifth consecutive m/m gain.

The pending home sales index measures sales at the time the contract for the purchase 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 leads 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, % chg) Sep Aug Jul Sep Y/Y % 2019 2018 2017
Total -2.2 8.8 5.9 20.5 1.1 -4.1 -0.8
   Northeast 2.0 4.3 25.2 27.7 0.8 -5.0 0.6
   Midwest -3.2 8.6 3.3 18.5 -0.3 -4.6 -2.5
   South -3.0 8.9 0.9 19.6 1.8 -1.9 0.6
   West -2.6 12.7 6.8 19.3 1.3 -7.3 -2.5
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