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Economy in Brief

U.S. Pending Home Sales Climb Again
by Sandy Batten  September 30, 2020

• Pending home sales rise to record high in August.

• Fourth consecutive monthly gain; sales rise in all four major regions.

• Record highs in Midwest and South.

Pending home sales rose for the fourth consecutive month in August, rising 8.8% m/m (+24.2% y/y) to a record high of 132.8 (2001=100), according to data released by the National Association of Realtors. While the August gain was still slower than the dramatic rebounds in May and June, it reflected a pickup in activity from the 5.9% m/m rise in July. The rise in home sales has been supported by the continued decline in mortgage rates with the rate on a 30-year mortgage in the Mortgage Bankers Association weekly survey falling to a record low in August.

Pending home sales rose again in all the major regions of the country. And while August gains were generally smaller than the rebounds in May and June, they were meaningfully stronger than those in July, apart from the Northeast. The largest monthly gain in August was in the West with pending sales up 13.1% m/m (+23.6% y/y) after a 6.8% monthly increase in July. Pending sales rose 8.6% m/m to new record highs in both the Midwest and the South. These series begin in 2001. From a year ago, sales were up 25.0% in the Midwest and 23.6% in the South. After an outsized 25.2% m/m jump in July, pending sales in the Northeast slowed sharply in August, gaining 4.3% m/m (+26.0% y/y).

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) Aug Jul Jun Aug Y/Y % 2019 2018 2017
Total 8.8 5.9 15.8 24.2 1.1 -4.1 -0.8
   Northeast 4.3 25.2 45.1 26.0 0.8 -5.0 0.6
   Midwest 8.6 3.3 12.2 25.0 -0.3 -4.6 -2.5
   South 8.6 0.9 12.3 23.6 1.8 -1.9 0.6
   West 13.1 6.8 11.7 23.6 1.3 -7.3 -2.5
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