The NAR pending home sales index for June is up 0.3 percent to 76.8 after a negligible upward revision to 76.6 in May. The June percent change matches the consensus in the Econoday survey of forecasters. The month-over-month rise is the first since February. The small increase reflects that homebuyers are out there but are just having trouble finding inventories of existing homes to buy. As a consequence, homebuyers are turning to new construction where homebuilders have ramped up activity to meet demand.

However, overall the housing market remains below year-ago levels. The index is down 15.6 percent from a year earlier. To some extent this is a function of the rapid rise in mortgage rates. In June 2022 the Freddie Mac rate for a 30-year fixed rate mortgage was 5.52 percent. One year later the average for June 2023 is 6.70 percent. Households who can prequalify for a mortgage and want to buy are in fierce competition for affordable units.

Pending home sales in June, which in May fell 2.7 percent, are expected to rise 0.3 percent.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.