August 2015 Pending Home Sales Index Headlines Say The Index Declined But Still "Healthy"

The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined. Our analysis of pending home sales shows a mixed picture. The quote of the day from this NAR release:

The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,

Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).

The NAR reported:

Pending home sales index was down 1.4 % month-over-month and up 6.1 % year-over-year (last month was reported 7.4 % year-over-year).

The market was expecting month-over-month growth of 0.0 % to 1.0 % (consensus 0.5%) versus the growth of -1.4 % reported.

Econintersect‘s evaluation using unadjusted data:

the index growth was down 0.4% month-over-month and up 6.7 % year-over-year.

The current trends (using 3 month rolling averages) declined but remains in expansion.

Extrapolating the pending home sales unadjusted data to project September 2015 existing home sales, this would be a 4.6 % decline year-over-year for existing home sales.

Unadjusted 3 Month Rolling Average of Year-over-Year Growth for Pending Home Sales (blue line) and Existing Home Sales (red line)

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From Lawrence Yun , NAR chief economist:

…. even with the modest decline in contract signings, demand continues to outpace housing supply and elevate price growth in numerous markets. Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget. Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.

…. sales in the coming months should be able to roughly maintain their current pace. However there are looming speed bumps that have the potential to impact housing.

…. the possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being. Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.