Economist's Insights

Pending Home Sales Point to Continued Struggles for Existing Homes Transaction

Jun 27, 2018

Pending home sales fell for a second month in May and have now missed estimates in five of the last six reports. Total pending sales slipped 0.5% in May because of a large 3.5% pullback of activity in the South, where existing sales account for roughly 40% of total activity. The other three regions that drive the remaining 60% of volume actually saw activity improve. Contract signings rose 2.0% in the Northeast, rebounded 2.9% in the Midwest, and edged 0.6% higher in the West. Stepping away from the monthly changes which tend to be noisy, the prognosis for future existing homes sales remains downbeat.

Non-seasonally adjusted pending sales on a year-over-year basis have declined in 10 of the last 17 months. And looking at the seasonally adjusted index, pending sales have been in a clear downtrend since peaking in 2016. The NAR’s chief economist said, “Realtors in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”