The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. As such, 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. Why Investors Care
| Released on 12/10/07 For Oct 2007 | ||||||||
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Highlights
The pending home sales index rose 0.6 percent in October to 87.2, showing a narrowing year-on-year decline of 18.4 percent vs. 20 percent declines in prior months. Gains in the latest month were centered in the Northeast and West, offset in part by declines in the Midwest and especially the South which is the center of weakness at a 25.3 percent year-on-year decline.
The text of the report is very upbeat saying reports of housing weakness have been "over exaggerated" and are scaring away buyers. It said the worst of the credit crunch is already reflected in the data, and it forecast an "unleashing" of pent-up demand in future months.
Today's report offers an indication of improvement for November and December existing home sales. November existing home sales will be released at month-end. The condition of the housing sector is certain to be cited in tomorrow's FOMC statement, and today's results may feed some optimism. Stocks and the dollar firmed in immediate reaction to the data while Treasury yields crept higher.
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