Pending Home Sales Index Drops to 19-Month Low

Mark Lieberman

Managing Director and Senior Economist


  • National Association of Realtors’ Pending Home Sales Index (PHSI) FELL 2,6 percentage points in August to 106.3, the lowest levels since January 2016;
  • PHSI has fallen in six of the eight months this year
  • August decline was the steepest since January;
  • Year-year the index is also DOWN 2.6 percentage points.

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There was more bad news for the housing sector with Wednesday’s report that the National Association of  Realtors’ (NAR) Pending Home Sales Index (PHSI) fell for the fifth time in six months and sixth time this year. The PHSI data followed by one day a government report showed new home sales fell for the second straight month in August. Both reports measure contracts for sale, not closings.

Last week, the NAR reported existing home sales (closings) in August dropped for the third straight month to the lowest level in a year

Spinning like a top, the NAR said Hurricanes Harvey and Irma would pull sales down. The PHSI in the South fell 3.5 percentage points in August (matching April for the sharpest month-month decline since April 2014). The PHSI fell 4.4 percentage points in the Northeast in August.

The real culprit seems to be supply. The existing home sales report showed a decline in the number of homes for sale, down to 1.88 million in August from 1.92 million in July. That 1.88 million computes to a 4.2-month supply of homes for sale, unchanged since May.

The median price of an existing single family home dropped in August to $253,500, the second straight month-month decline. Year-year the median price is up $13,500, a 10.1 percent increase. Still, that hasn’t been enough to lure sellers back to the market, frustrating buyers who see choices reduced. That standoff spilled over to contracts for sale executed in August.

A Bloomberg analysis earlier this month found empty nesters are holding on to their homes, an anlysis confirmed by homeownership by age cohort data from the Census Bureau. At the same time younger, first-time homebuyers – many of whom are burdened by heavy student loan obligations — are facing challenges in accumulating money for a down payment and qualifying for a mortgage.

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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