U.S. Pending Home Sales Drop Most Since Early 2018
U.S. Pending Home Sales Drop Most Since Early 2018
(Bloomberg) --
Contract signings to purchase previously owned U.S. homes fell in July by the most since early 2018, indicating a pause in buyer interest even against a backdrop of falling mortgage rates, a firm job market and steady income gains.
The National Association of Realtors’ index of pending home sales decreased 2.5% from the previous month, data from the group showed Thursday. The median forecast in Bloomberg’s survey called for no change. Compared with a year earlier, contract signings were up 1.7% on an unadjusted basis, the most since early 2017.
Key Insights
- Even with the monthly decline, the index has steadily improved since the end of last year. The cheapest mortgage rates in nearly three years and a jobless rate hovering around five-decade lows hold the potential for further strength in coming months.
- Recently released July data show contract closings on existing home purchases increased to the highest level since February, while starts of one-family dwellings were the strongest in six months.
- Pending home sales are often considered a leading indicator of existing-home purchases and a measure of the health of the residential real estate market in coming months.
- A separate report Thursday on gross domestic product showed housing construction contracted for a sixth-straight quarter. Residential investment shrank at a 2.9% pace in the second quarter that was initially reported as a 1.5% drop.
Official’s View
“Super-low mortgage rates have not yet consistently pulled buyers back into the market,” Lawrence Yun, NAR’s chief economist, said in a statement. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
Get More
- Signings decreased in all four regions, led by a 3.4% drop in the West. Pending sales in the South, the biggest region, decreased 2.4%.
- Forecasts for monthly pending home sales in the Bloomberg survey of economists ranged from a 1% decline to a 1% advance.
To contact the reporter on this story: Vince Golle in Washington at vgolle@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns
©2019 Bloomberg L.P.