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The Econoday pending home sales consensus for september was a gain of 0.4% in an extremely wide range of -1.9% to +1.9%. The NAR reports the index was flat vs August at 106.0, down from a peak in November last year of 112.3.

Hurricane Impacts

Econoday reports " Unlike yesterday's new home sales report where sales spiked in the South, resales in the region are showing visible hurricane effects, down 2.3 percent in the month following August's 3.7 percent decline. Year-on-year rates show the South the weakest, down 5.0 percent, with the Northeast doing the best at minus 2.4 percent. Pending sales overall are down a yearly 3.5 percent which is slightly steeper than the 1.5 percent decline for final sales."

Stuck at Two-Year Lows

Mortgage News Daily reports Pending Home Sales Stuck at 2-Year Lows

We called the August pending home sales report "the gloomiest in some time." The best that can be said about the report released this morning for September is, at least it didn't get any worse.

The National Association of Realtors® (NAR) said that its Pending Home Sales Index (PHSI), which measures contracts for the purchase of existing homes, was at 106.0, matching the August reading, which was revised down from 106.3. The PHSI is a forward-looking index which is expected to be mirrored in closed transactions over the following two months.

Once again Lawrence Yun, NAR chief economist, repeated his perpetual nonsense about supply. "Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year," he said. "While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year's pace because new listings aren't keeping up with what's being sold."

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Prospective buyers at the lower end of the market, which includes many first-timers, continue to be squeezed by the supply constraints, Yun said. In September, only 29 percent of existing home buyers were purchasing their first home; that matched the lowest share in exactly two years. Furthermore, existing sales were down notably on an annual basis in the price range below $250,000, but up solidly the higher up the price bracket.

There's always a demand for frees stuff. If homes were free, there would be unlimited demand.

Trend is Lower

The hurricanes impacted the South, but every region is down from a year ago.

The last increase in the pending home sales index was in June. The index is now at its lowest reading since January 2015 and 3.5 percent below a year ago. It has fallen on an annual basis in five of the past six months.

This is in sharp contrast to new home sales which spiked yesterday. For new home sales, please see New Home Sales Surge Most in 28 Years on Percentage Basis.

Mike "Mish" Shedlock