- Prior was +0.3%
- Index vs 71.2 prior
For background. the US pending home sales report provides an early indication of demand in the existing housing market. Published monthly by the National Association of Realtors, it tracks signed contracts to purchase existing homes, rather than completed transactions.
That distinction is what gives the report its value. A home typically goes under contract one or two months before the sale closes, making pending sales a leading indicator for the existing home sales report. It offers a more timely view of how buyers are responding to mortgage rates, prices and available inventory.
The headline measure is the Pending Home Sales Index, with 100 representing the average level of contract activity in 2001. It is an index of activity, not a count of homes sold or a measure of prices. Markets generally focus on the monthly percentage change, alongside annual comparisons and regional details.
Mortgage rates are a key driver. Lower borrowing costs can improve affordability and bring buyers back into the market, while higher rates can quickly reduce purchasing power. However, cheaper financing alone does not guarantee stronger sales if prices remain stretched or suitable properties are scarce.
For the broader economy, housing transactions support spending on renovations, furniture, appliances and moving services. The report therefore helps investors assess household demand and how financial conditions are filtering through the economy.
The main caveat is that signed contracts are not final sales. Financing problems, inspections or changes in buyers’ circumstances can derail transactions. Weather and regional swings can also distort monthly figures, so a sustained trend carries more weight than a single reading.
This article was written by Adam Button at investinglive.com.