Pending Home Sales Index Down Again in August

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ August Pending Home Sales Index (PHSI) FELL8 percent from July to 104.2;
  • Year-year the index was DOWN7 percentage points;

Trends:

  • The August decrease was the fifth this year;
  • Index is down year-year for the eight straight months;

Data Source: National Association of Realtors (NAR) 

Image result for pending home sales

In another blow to home sales, the NAR’s pending home sales index dropped again in August, the fifth decline this year, as home sales face continued challenges in fears of a recession and higher interest rates.

The report followed by one day the parallel report on new home sales from the Census Bureau which showed a 3.5 percent increase in new home sales in August – contracts for sale – from July.

It also followed by one day the action by the Federal Open Market Committee increasing the target Fed Funds rate. Although the Fed Funds rate is not directly related, mortgage interest rates are also rising. Freddie Mac reported Thursday the average rate for a 30-year mortgage rose to 4.72 percent from 4.65 percent one week earlier and 3.83 percent one year ago. That translates into a monthly payment of $1,558.07 up 11.2 percent from $1,401.30 a year ago. It was the fifth straight week mortgage rates, as surveyed by Freddie Mac, have increased.

Sales of existing single-family homes have not increased for five straight months (sales were flat from July to August) even though the pending home sales index improved in three of those five months.

The median price of an existing single-family home fell $4,500 in each of the last two months without having a positive impact on the sales rate.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

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