Pending Homes Sales Unexpectedly Decline 3.8 Percent in December

Data from the NAR, chart courtesy of Trading Economics. 

Pending Home Sales

Existing home sales are counted at closing. In contrast, new home sales are counted at contract signing.

The National Association of Realtors (NAR) posts a pending home sales report monthly. It’s an preliminary count of signed contracts that acts as a leading indicator of existing home sales. 

The NAR newsroom reports Pending Home Sales Slide 3.8% in December.

The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

Key Highlights

  • Contract signings were 3.8% lower in December from the prior month.
  • Contract signings were down across all regions compared to the prior month and one year ago.
  • Existing-home sales are expected to decline by 2.8% in 2022, and home prices are expected to move higher by 5.1% due to the ongoing housing shortage, even as builders ramp up production. 

By Region 

  • In the Northeast the pending home sales index fell 1.2 percent.
  • In the Midwest, the index dropped 3.7 percent.
  • In the South the index fell 1.8 percent.
  • In the West the index plunged 10.0 percent.

The index is volatile but the decline makes sense. Mortgage rates are going up and so are prices. 

It’s increasingly more difficulty to come up with a down payment.

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vboring
vboring
2 years ago
At least in Central Coast California, it feels like a serious supply shortage. 
Talking with a Realtor, there is also a move towards private sales where they don’t even bother to list. The seller agent finds a buyer within their own agency and friends network buyer agent pool. Are these transactions caught in this data?
Mish
Mish
2 years ago
Apologies for the delay in posting – Creating lots of new charts – Out soon
Tony Bennett
Tony Bennett
2 years ago
Interesting day.
$US (dxy) hit its 52 week high today.
20 yr and 30 yr have been inverted for a while
7 yr and 10 yr joined them today (neck and neck and good chance un-invert … but at the moment inverted).
Doug78
Doug78
2 years ago
Reply to  Tony Bennett
I am waiting for the fat lady to sing but I don’t see her in the wings.
Tony Bennett
Tony Bennett
2 years ago
Reply to  Doug78
“The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2022 is 0.1 percent on January 28.”
Zardoz
Zardoz
2 years ago
Reply to  Doug78
The fat lady has been cancelled.
Doug78
Doug78
2 years ago
Reply to  Zardoz
Did she catch covid?
Eddie_T
Eddie_T
2 years ago
Reply to  Doug78
She had her Peloton repossessed.
Christoball
Christoball
2 years ago
Someone once told me that the average house turns over every 10 years due to factors such as Death, Divorce, Taxes, and Career????? These factors will not all of a sudden stop. People talk about low inventory now but there is a natural tide that cannot be held back. It will not be different this time. This site has an interesting interactive map.
thimk
thimk
2 years ago
Adequate supply of new homes , if one could get them completed.
The number of single-family houses for sale that were still under
construction jumped to 263,000 in December, the highest since August
2007 ..
And Biden effectively doubling  tariffs on Canadian softwood lumber did not help.  Now Canada/USA has vaccine mandates in place for truckers crossing border. Until we find an alternate building material, lumber prices will remain high.
Here’s  an article on issues facing Canadian lumber producers/prices. 
Tony Bennett
Tony Bennett
2 years ago
Consumer Sentiment Index tanking.
Prior … 68.8
expected … 68.6
actual … 67.2
“Sentiment fell throughout January, posting a cumulative loss of 4.8%, sinking to its lowest level since November 2011.” 
dbannist
dbannist
2 years ago
In Eastern NC, since Dec, the number of homes for sale has plummeted by nearly 50%.

I think the drop in home sales has more to do with the lack of inventory than rising interest rates, though that is also a factor.

In the last month there has been an absolutely massive drop in inventory nationwide.

dpy
dpy
2 years ago
Looking around my neighborhood, I see lots of unqualified new owners.  They must just be scratching by. Maintenance is going to sh!t.  Younger people or first-time buyers mostly.
It seems like most potential new market entrants are already in. 
Time for 2008 all over again?
Tony Bennett
Tony Bennett
2 years ago
Reply to  dpy
Sure, why not?
I recall an old Twilight Zone episode.  A hard core gambler dies … and thinks he’s in Heaven.  Why?  Every bet he places in the casino is a Winner!  Loves it … for a while.  Then he starts to make real risky bets.  Still wins every bet.  Tries to lose.  Can’t. 
Not in Heaven.
Eddie_T
Eddie_T
2 years ago
Not sure about sales, but I expect prices to keep going up for a while. It could turn, sure, but we aren’t getting there with just Fed jawboning about dot plots. Real raises do matter, but right now this is just a knee jerk response to a slight increase in rates. People are half expecting them to go back down. If they do start  to move up steadily, it might actually bring FOMO back to the market. Supply is constrained.
Sunriver
Sunriver
2 years ago
I live in Boise Idaho. The most over priced housing market in the country by many measures. The everything Bubble is alive and well in Boise! I’m sure glad we partnered with the FED to enslave future generations with hopeless debt.
KidHorn
KidHorn
2 years ago
Higher interest rates and no more free money. No surprise.

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