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US: Pending Home Sales Index
| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 0.9% | 0.5% to 1.6% | 1.4% | 1.5% | 1.7% |
| Index | 74.8 | 73.7 | 73.8 |
Highlights
Pending home sales top expectations with an increase of 1.4 percent in April from March, compared with the 0.9 percent rise anticipated in the Econoday consensus. The already strong March increase was revised up to 1.7 percent from 1.5 percent previously reported. April sales are up 3.2 percent from a year ago.
The NAR reports buyers are returning to the market despite economic uncertainty and rising mortgage rates. The group projects sales would be higher still if only mortgage rates return to where they were earlier in the year. The NAR report suggests consumer sentiment may be bleak, as reported by the University of Michigan and Conference Board, but housing demand remains robust.
Sales are up 6.6 percent on the month in the Northeast, up 3.0 percent in the Midwest, up 0.4 percent in the West, and down 0.7 percent in the South.
Market Consensus Before Announcement
Sales expected up 0.9 percent on the month.
Definition
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.
Description
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.
