September 2017 Pending Home Sales Seasonally Adjusted Index In Contraction

The National Association of Realtors (NAR) seasonally adjusted pending home sales index was unchanged. Our analysis says it declined. The quote of the day from this NAR release:

…the quest to buy a home this fall continues to be a challenging endeavor for many home shoppers …

Analyst Opinion of Pending Home Sales

The rolling averages are in negative territory. The data is very noisy and must be averaged to make sense of the situation. There is no signs of a surge in home sales, and the overall downward trends remain in play.

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 unchanged month-over-month and down 3.5 % year-over-year.

The market [from Bloomberg / Econoday} was expecting month-over-month growth of -1.9 % to 1.9 % (consensus +0.5 %) versus the 0.0 % reported.

Econintersect‘s evaluation using unadjusted data:

the index growth rate was down 2.0 % month-over-month and down 5.4 % year-over-year.

The current trend (using 3 month rolling averages) is declining..

Extrapolating the pending home sales unadjusted data to project September 2017 existing home sales would be down 2.7 % year-over-year for existing home sales.

From Lawrence Yun , NAR chief economist:

…. the quest to buy a home this fall continues to be a challenging endeavor for many home shoppers. Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year,. While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold.

Hurricane Irma’s direct hit on Florida weighed on activity in the South, but similar to how Houston has rebounded after Hurricane Harvey, Florida’s strong job and population growth should guide sales back to their pre-storm pace fairly quickly. As has been the case most of the year, Yun says the ongoing supply constraints continue to squeeze prospective buyers the most at the lower end of the market. Last month, first-time buyers were 29 percent of all transactions, which matched the lowest share in exactly two years1. Furthermore, existing sales were down notably on an annual basis in the price range below $250,000, but up solidly the higher up the price bracke.

Buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months,” said Yun. “Inventory starts to decline heading into the winter, and many would-be buyers from earlier in the year are still on the hunt to find a home.