Pending Home Sales Index Flat in September With Supply Constraints

Mark Lieberman

Managing Director and Senior Economist


  • National Association of Realtors’ September Pending Home Sales Index (PHSI) was FLAT to August at 106.0, the lowest level since January 2015;
  • PHSI for August was revised down from 106.3 to 106.0;
  • August decline was the steepest since January;
  • Year-year the index is also DOWN 3.5 percentage points.

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Even after the government’s new home sales report showed a sharp increase in September, the National Association of Realtors’ Pending Home Sales Index (PHSI)  was unchanged, hinting at more disappointing home sales. The PHSI, like the government report, measures homes under contract for sale. The PHSI has declined in six of the first nine months of this year.

The NAR blamed weak inventories – limiting buyer choice – for the weak report and weak sales outlook. The Census Bureau reported 1,201,000 vacant homes for sale at the end of the second quarter, the lowest total since the end of the first quarter of 2002 when there were 1,197,000 vacant homes for sale.

According to the Census figures, 7,450,000 homes were “held off market” at the end of the second quarter, the highest total in over a year. At the end of the first quarter of 2016, 7,572,000 homes were “held off market.”

Homes that were destroyed in Texas and Florida will only add to the supply constraints while at the same time increasing demand. That said, the purchase of a home is not a decision on which buyers will compromise.

But pending home sales were weakening in the South even before hurricanes Harvey and Irma made landfall. Indeed, the PHSI in the South has dropped for five of the last six months, according to the NAR.

The index fell 2.3 percent in the South in September while rising in the other three Census regions: up 1.9 percent in the West, 1.4 percent in the Midwest and 1.2 percent in the Northeast.

Nationally the PHSI fell 3,5 percent year-year, the largest annual decline since April when the index was off 3.7 percent from the prior year.

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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