Leading Indicator of U.S. Home Sales Weakens for Third Straight Month

Abstract

The numbers: U.S. pending-home sales fell 2% in August, for the third straight monthly drop, according to the monthly index released Wednesday by the National Association of Realtors. Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. The fall in pending sales was preceded by a drop in mortgage application activity, which fell in the latest week. Key details: Compared with a year earlier, transactions were down by 24.2%. Pending sales fell in the Northeast, the Midwest, and the South, but rose in the West by 1.4%. Sales are still down year-over-year in the West by 31.3%. This is the ninth time pending home sales have fallen in the last ten months. While new home sales rose unexpectedly in August, most economists viewed the jump as a one-off. The NAR expects existing-home sales to fall by 15.2% in 2022, to 5.19 million units. Despite the weak sales outlook, prices are still not expected to drop.