The National Association of Realtors® (NAR) pending home sales index rose 1.4% in April to 74.8, markings its third consecutive increase and highest level since November. This was better than the expected 1.0% monthly growth and marks a 3.2% rise from one year ago.
“Buyers are coming out with cautious optimism despite increasing economic uncertainty and a slight rise in mortgage rates,” said NAR Chief Economist Dr. Lawrence Yun. “Demand will easily be even higher once mortgage rates retreat to the levels they were at earlier this year.”
“Historically low foreclosure sales imply minimal price discounts, with a majority of markets selling at a higher price from a year ago,” Yun said. “Unless supply meaningfully increases, home price growth could outpace wage growth and further erode the homeownership rate. All efforts need to be focused on boosting housing supply.”
Pending Home Sales Background
The pending home sales index (PHSI) was created by the National Association of Relators to track home sales where the contract is signed, but the transaction has not yet closed. An index of 100 is equal to the level of contract activity in 2001. The PHSI is a leading economic indicator of future existing home sales.
The chart below gives us a snapshot of the index since 2001, the first year data was analyzed.
Over this time frame, the US population has grown by 20.7%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.
The above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 42% below its all-time high from August 2020. The population-adjusted index is 49% off its high from April 2005.
