Pending Home Sales Hit 71.2 in August as Buyers Stay Sidelined
"Nationally, contract signings today are running roughly 30% below where they were in the years leading up to the pandemic."
That is NAR chief economist Lawrence Yun on the August pending home sales data, released September 17. The national Pending Home Sales Index rose 0.3% month over month to 71.2 in August. July was revised to 71.0, down 2.6%. Year over year, pending sales fell 4.7%.
The index is benchmarked so that 100 equals average contract activity in 2001, the first year NAR tracked the data.
Regional split
The South gained 2.3% month over month to an index of 86.2, and the West gained 3.0% to 54.3. The Northeast fell 4.2% to 61.6 and the Midwest fell 1.6% to 72.1. All four regions fell year over year, led by the West at down 6.7%.
Yun: "Buyers steadily entered into contracts in August even though mortgage rates increased... the housing market is still sluggish, with contract signings below last year. This is due to higher mortgage rates offsetting the increased buying power created by job gains and income growth outpacing home price growth."
"Transaction activity peaked in 2021 when mortgage rates fell to near 3%, a historic low, and has not approached that level since," Yun added.
The rate backdrop: the 30-year fixed averaged 6.76% in the latest Freddie Mac reading, the highest in more than a year. Reuters notes the 10-year Treasury hovering around 5.0% amid inflation pressures, uncertainty over the Fed's response, and a ballooning national debt. The Fed raised rates on September 16, its first hike since July 2023.
HousingWire data counted 356,106 pending single-family homes for the week ending September 11, down 2.1% from a year earlier. Yun attributed the Northeast and Midwest declines partly to those regions seeing the fastest home-price growth in August.
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Options market and stocks to watch
Pending sales are a leading indicator, and the options market trades housing names on rate expectations. Watch these names:
XHB: homebuilders live and die on contract signings and the 30-year rate. A 71.2 print keeps the pressure on.
XLRE: the real estate ETF catches the sector-wide read on every NAR release.
Z: Zillow is the demand-sentiment proxy and moves with listings and buyer-activity data.
RKT: Rocket is the mortgage-origination pure play, directly levered to transaction volume.
Watch for unusual flow and GEX shifts around NAR releases and Fed decisions. For more real estate coverage, see other market news here.
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