Pending Home Sales Index Rises With Lower Mortgage Rates

Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • National Association of Realtors’ Pending Home Sales Index (PHSI) ROSE 1.6 percent in August to 105.6;
  • Year-year the index ROSE 3.1 percent.

Trends:

  • The PHSI ROSE year-year for the just the second time in the last 20 months;
  • The Index for August ROSE for the third time in the last four months.

Data Source: National Association of Realtors (NAR)

Image result for pending home sales

With mortgage rates remaining low – and closing out the traditional home-buying season – the National Association of Realtors Pending Home Sales rose in August for the third time in the last four months.

The NAR’s report came as Freddie Mac ‘s weekly mortgage survey showed the average rate for a 30-year fixed rate loan dipped to 3.64 percent from 3.73 percent a week ago.

The August PHSI recovered some of the 2,5 percent drop registered in July. The NAR report came one day after the Census Bureau and Department of Housing and Urban Development reported new home sales – tracked by contract, not closings – increased a solid 7.1 percent in August after dropping 8.6 percent in July.

The NAR gain came at the tail end of what is considered a home-buying season when families try to settle in a new home before the school year begins. Nonetheless contracts signed in August likely won’t become closings until late September or October.

Closings increased in July and August, lining up with increases in the PHSI for May and June. The July drop in the PHSI presages a decline in closings in September.

Though the PHSI rose in each of the four census regions in August, the increases in each case were less than the declines in July.

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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