Pending Home Sales Chart courtesy of Trading Economics and NAR
Pending Home Sale Description
Pending sales are signed contracts where the transaction is not yet complete. They are a leading indicator of future existing home sales.
In this case, pending home sales for November represent a preview of deals that will occur in December or January.
Note that existing home sales are reported upon closing while new home sales are recorded upon signing.
Pending home sales slipped 4.0% in November
The National Association of Realtors reports pending home sales fell 4.0% in November
According to the National Association of REALTORS®, pending home sales fell for the sixth straight month in November. All four US regions recorded month-over-month declines and all four regions recorded year-over-year declines in transactions.
“Pending home sales hit the second-lowest monthly figure in 20 years as interest rates, which have risen at one of the fastest rates on record this year, have drastically reduced the number of home-buying deals signed,” said NAR Chief Economist Lawrence Yun . “Declining home sales and construction have impacted overall economic activity.”
The Pending Home Sales Index (PHSI) — a forward-looking indicator of home sales based on contract signings — fell 4.0% to 73.9 in November. Year over year, outstanding transactions decreased by 37.8%. An index of 100 corresponds to the level of contract activity in 2001.
Pending home sales in the United States fell 37.80 percent year-on-year in November 2022. This is the 18th consecutive month of year-on-year declines.
The NAR will report existing home sales for December on January 20, 2023. Don’t expect the report to be good.
Inevitable rebound?
Nar (Cheerleader) chief economist commented, “With mortgage rates falling in December, home buying is bound to rebound and support economic growth in the coming months.”
There will be a rebound eventually, but not for the coming months based on interest rates.
Mortgage interest for 30 years
30-year mortgage rates courtesy of Mortgage News Daily, annotations by Mish
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Existing home sales fall another 7.7 percent in the 10th month
On December 21st, I noticed that the 10th month of existing home sales was down another 7.7 percent.
Existing home sales plummeted from February as interest rates hit the 4 percent mark. Today the rate is 6.5 percent below the peak of 7.2 percent.
That’s not enough to revive the housing market unless prices plummet. So far, prices have remained stubbornly high.
Home prices are falling in all major markets, what about year after year?
On December 27th I found that house prices are falling in all major markets, what about year-on-year?
The peak has been reached, but declines cannot yet offset the huge rise in interest rates.
What about credit?
In case you missed it, please see my discussion of money supply and credit in Is Inflation Always and Everywhere a Monetary Phenomenon?
This post is from MishTalk.Com.
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