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Economy in Brief

U.S. Pending Home Sales Down for the Eighth Time in Nine Months in July
by Winnie Tapasanun  August 24, 2022

• -1.0% m/m (-19.9% y/y) in July vs. -8.9% m/m (-20.2% y/y) in June; the decline eases somewhat, reflecting the recent retreat in mortgage rates.

• July PHSI at 89.8, lowest since April 2020.

• Sales fall m/m in Northeast, Midwest and South, but sales in the West post the first m/m gain since January.

• Sales continue to drop y/y by double digits in all the major regions.

The Pending Home Sales Index fell 1.0% m/m (-19.9% y/y) to 89.8 in July after an 8.9% drop in June (-8.6% initially) and a 0.4% increase in May, according to the National Association of Realtors (NAR). The July m/m fall was the eighth in nine months to the lowest index level since April 2020’s 71.6. Pending home sales have fallen 26.6% since the October 2021 peak.

Pending home sales decreased in most of the country in July, except the West where they rebounded 2.2% (-30.1% y/y) following a 16.2% June slump. The July m/m gain in the West was the first since January’s 1.4% increase. Sales in the Midwest slid 2.7% (-13.4% y/y) in July on top of a 3.8% decline in June. Sales in the South fell 1.1% (-20.0% y/y) after a 9.3% June drop. The Midwest and South regions experienced the sales declines for the eighth time in nine months to their lowest levels since April 2020. Sales in the Northeast dropped 1.9% (-15.4% y/y) following a 6.8% June decrease and a sizable 15.4% May gain.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar 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 usually a couple of months after the sales contract has been signed. 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 are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the SURVEYW database.

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