Gauge of U.S. pending home sales declines to a six-month low

A gauge of U.S. pending home sales fell to a six-month low in January as buyers competed for a limited number of properties.

The National Association of Realtors’ index of pending home sales decreased 2.8% from the prior month to 122.8, according to data released Thursday. December data was revised to a 0.5% gain after a previously reported decline. The median estimate in a Bloomberg survey of economists called for no change in January.

The decline is the latest sign that the housing boom may be starting to cool amid soaring prices, a lack of inventory and rising mortgage rates. The residential real estate market has been a bright spot in the economy as it recovers from the pandemic. Contract signings are still up 8.2% from a year ago on an unadjusted basis.

“There are simply not enough homes to match the demand on the market” Lawrence Yun, chief economist at the NAR, said in a statement. Still, Yun said he expects inventory to rise in the coming months.

The lack of inventory thus far has driven prices upwards, putting homeownership out of reach for some, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.

“Various other data sources have pointed to higher median sales prices and record-high purchase mortgage loan sizes, all of which have started to create affordability challenges in many parts of the country,” he said. “While home building has picked up to attempt to meet the high demand, increased listings of existing homes will be needed in the coming months to alleviate this shortage of housing inventory.”

By region, contract signings fell in the West, Northeast and Midwest. In the South, the index for pending home sales rose to the highest since August.


Pending Home Sales Post 5th Straight Loss

January marked the fifth straight
month that the National Association of Realtors® (NAR) has reported a decline
in its Pending Home Sales Index (PHSI). The index, based on newly signed
contracts for the purchase of existing homes, was down 2.8 percent from its
December level.

The index in January was at
122.8 compared to 125.5 in December and has lost 10 points since August. Still,
pending sales were up 13 percent compared to a year earlier. This January’s
PHSI was, in fact, the highest for any January on record.  

Analysts had expected the index to be
flat but individual estimates by those polled by Econoday all overshot the
actual results. They covered a range from a 1.5 percent downturn to 0.5 percent
growth. The consensus was for zero change.

“Pending home sales fell in January
because there are simply not enough homes to match the demand on the market,”
said Lawrence Yun, NAR’s chief economist. “That said, there has been an
increase in permits and requests to build new homes.” Yun said that increase in
single-family permits has been consistent for eight months and is a good sign
that the supply and demand imbalance in the residential real estate market
could be easing as soon as mid-2021.

“There will also be a natural
seasonal upswing in inventory in spring and summer
after few new listings
during the winter months,” he said. “These trends, along with an anticipated
ramp-up in home construction will provide for much-needed supply.”

Following a week where January’s
existing-home sales increased, Yun noted that pending contracts are a great
early indicator for upcoming closed sales but stressed that the timing of the
relationship between existing-home sales and pending home sales may not be in

“The two measurements aren’t always
perfectly correlated due to varying amounts of time required to close a
contract,” Yun said. “This is because a number of fallouts can occur due to a
variety of factors, including a buyer not obtaining mortgage financing, a
problem with a home inspection, or an appraisal issue.”

He noted that the economy is showing
promising signs of improvement, and many millions of Americans are now receiving
a COVID-19 vaccination. Still, he cautioned that the better economic outlook,
rising inflation prospects and higher budget deficits will soon drive increases
in interest rates. “I don’t foresee mortgage rates jumping to an alarming
level,” he said, “but we should prepare for a rise of at least a decimal point
or two.”

Pending Home Sales Fall in January as Inventory Constrains Buyers>

The numbers: The index of pending home sales fell 2.8% in January after four consecutive months of declines, the National Association of Realtors said Thursday. The index captures real-estate transactions where a contract was signed but the sale has not yet closed, making it an indicator of where existing-home sales will go in the months ahead.

The median forecast of economists polled by MarketWatch had called for a 0.5% decline in pending sales on a monthly basis.

“Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” Lawrence Yun, the chief economist for the National Association of Realtors, said in the report. “That said, there has been an increase in permits and requests to build new homes.”

Compared to 2019, pending sales were up 13%, indicating that the housing market remains strong despite the weakness that has crept in during the winter months.

What happened: Pending sales didn’t fall across all regions, as contract signings increased slightly in the South. The largest decline in pending sales occurred in the West, where the index dropped 7.8%, closely followed by the Northeast (-7.4%).

The big picture: A record-low inventory of homes is leaving buyers with few options to choose from, and builders have even begun selling a vast array of properties that haven’t been built yet to meet this demand.

But there’s evidence that demand could begin to suffer as affordability concerns grow. “The timely weekly mortgage purchase applications index is signaling a slowing in activity,” said Rubeela Farooqi, the chief U.S. economist at High Frequency Economics, while citing mortgage application data from the Mortgage Bankers Association. The latest reading signified the lowest level for mortgage applications since mid-May of last year, Farooqi noted.

Some of the decline in the volume of mortgage applications was a reflection of the disruption in Texas caused by recent winter storms. But generally speaking, rising mortgage rates are reducing interest from home buyers to an extent. With prices also quickly rising, buying a home is becoming less and less affordable, which could hinder home sales in the months to come.

What they’re saying: “Home buyers are staying surprisingly active during the colder months. However, buyer demand is getting squeezed by a scarcity of ‘For Sale’ signs and rising mortgage rates,” said senior economist George Ratiu.


MBS Week Ahead: Battle to Find a Rate Ceiling Continues

Bond yields have been surging higher in February with last week bringing the sharpest losses so far.  The move has surprised more than a few market participants.  To be sure, the pace of selling doesn’t seem to fit with the economic reality at first glance.  Moreover, the higher yields have gone, the more expectations have increased for a technical correction.  In other words, we have to find a ceiling soon, even if it’s only temporary.  It looked like we found that ceiling in the middle of last week, but Friday saw yields break to new highs.  Now as the new week begins, we have more new highs (overnight) and more new hope for a ceiling bounce as bonds are rallying early.

20210222 open.png

On the data front, this week’s headliners include Durable Goods, Core PCE, and the 5/7yr Treasury auctions.  With the exception of Wednesday’s 5yr auction, all of that happens on the last 2 days of the week.  Incidentally, those are also the last 2 trading days of the month.  That means we could see a glut of trading momentum in one direction or the other, depending on how the rest of the week trades and how much “month-end” trading is left to be done.  

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.


UMBS 2.0

101-17 : -0-06


10 YR

1.3470 : +0.0020

Pricing as of 2/22/21 10:13AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Monday, Feb 22
10:00 Leading index chg mm (%) Jan 0.5 0.3
Tuesday, Feb 23
9:00 CaseShiller 20 yy (% ) Dec 9.9 9.1
9:00 CaseShiller 20 mm SA (%) Dec 1.3 1.4
9:00 Monthly Home Price yy (%) Dec 11.0
9:00 Monthly Home Price mm (%) Dec 1.0
10:00 Consumer confidence * Feb 90.0 89.3
Wednesday, Feb 24
7:00 MBA Purchase Index w/e 299.5
7:00 MBA Refi Index w/e 4337.0
10:00 New Home Sales (%) (%)* Jan 2.1 1.6
10:00 New Home Sales (ml) Jan 0.855 0.842
13:00 5-Yr Note Auction (bl)* 61
Thursday, Feb 25
8:30 GDP Prelim (%) Q4 4.2 4.0
8:30 Durable goods (%)* Jan 1.1 0.5
8:30 Core CapEx (%)* Jan 0.7 0.7
8:30 Jobless Claims (k) w/e 838 861
10:00 Pending Sales Index Jan 125.5
10:00 Pending Home Sales (%) Jan 0.0 -0.3
13:00 7-Yr Note Auction (bl)* 62
Friday, Feb 26
8:30 Core PCE Inflation (y/y) (%)* Jan 1.4 1.5
9:45 Chicago PMI * Feb 61.1 63.8
10:00 Sentiment: 5y Inflation (%) Feb 2.7
10:00 Sentiment: 1y Inflation (%) Feb 3.3
10:00 Consumer Sentiment (ip) Feb 76.5 76.2


Mortgage rates hit a fresh record low ahead of Fourth of July weekend – MarketWatch

Could average mortgage rates drop below the 3% mark? If the recent trend continues, that’s a distinct possibility.

The 30-year fixed-rate mortgage averaged 3.07% for the week ending July 2, down six basis points from the week prior, Freddie Mac FMCC, -0.53%   reported Thursday. In comparison, these loans had an average rate of 3.75% a year ago.

The 15-year fixed-rate mortgage dropped three basis points to an average of 2.56%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage fell by eight basis points to 3%.

The previous record low for the benchmark 30-year mortgage was set just two weeks ago at 3.13%. Mortgage rates have dropped to historic lows multiple times this year as the coronavirus pandemic has caused turmoil in markets and the economy.

This week, the decline in rates came “as investors reacted to the surge in COVID cases and the Federal Reserve’s concerned outlook for economic recovery,” said George Ratiu, a senior economist at The drop came even though there were some positive indicators about the state of the economy, including the rise in pending home sales and consumer confidence.

( is operated by News Corp NWSA, +4.53%   subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

Don’t miss:Mortgage rates keep falling to record lows — so is now a good time to refinance?

When the coronavirus outbreak first began worsening in the U.S., many mortgage and real-estate experts ruled out the possibility of rates dropping below that threshold.

But now rates on the 30-year loan are standing at the precipice of the 3% mark. “Mortgage rates continue to slowly drift downward with a distinct possibility that the average 30-year fixed-rate mortgage could dip below 3 percent later this year,” said Sam Khater, Freddie Mac’s chief economist, in this week’s report.

The trajectory of rates will largely depend on the direction the recovery from the pandemic takes. Many states across the country have seen a surge in COVID-19 cases recently.

‘Getting approved for a loan is proving to be a difficult challenge for many, especially first-time homebuyers who struggle to come up with a 20% down payment.’

— George Ratiu, a senior economist at

And some of those states were driving the rebound in the housing market that began taking shape back in May. A report released this week by the housing data provider HouseCanary found that Florida and Texas were leading the country in terms of elevated demand for homes at the end of June.

Both states have seen thousands of new COVID-19 cases on a daily basis in recent weeks, though, suggesting that the surge in coronavirus infections might threaten the housing market’s rebound.

And record-low mortgage rates aren’t having the same boost to consumer interest that they usually do. Last week, the number of applications for mortgages used to purchase homes dropped, according to data from the Mortgage Bankers Association.

“Getting approved for a loan is proving to be a difficult challenge for many, especially first-time homebuyers who struggle to come up with a 20% down payment,” Ratiu said.

Lenders have raised their underwriting standards in the face of the economic downturn, which could limit how much of a stimulatory effect interest rates will have on the housing market.


Pending Home Sales Fall on the Month, but the Midwest Is Hit the Hardest

The numbers: The index of pending home sales dropped 0.3% in December, marking the fourth consecutive month of declines, the National Association of Realtors said Friday. The index measures real-estate transactions in which a contract is signed, but the sale had not yet closed.

Compared to 2019, pending sales were still up 21%, a sign of how strong the market is right now despite the recent weakness.

What happened: Pending sales didn’t fall across all regions, as was the case in November.

In fact, the Midwest was the only region to experience a decline, with a 3.6% drop. Pending sales were flat in the West and rose by 3.1% in the Northeast and 0.1% in the South.

The big picture: In the months to come, the story will be whether the number of listings of homes for sale will grow to meet demand.

“Pending home-sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” said Lawrence Yun, the National Association of Realtors’ chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”

It’s not clear precisely what has held sellers back from putting their homes on the market. But the problem could be a self-perpetuating one: Some buyers might be seeing the dearth of homes for sale and be reluctant to list their own for fear of not finding somewhere to move to.

What they’re saying: “Demand for existing homes remains strong but supply is likely restraining sales figures,” said Ruben Gonzalez, chief economist at Keller Williams. “We expect to see continued price acceleration in the near term as a result of record-low inventory levels that have persisted for several months now.”

Market reaction: The Dow Jones Industrial Average and S&P 500 both fell in Friday morning trades.


6 Reasons Why This Is Actually the Best Time in Years To Sell a House

Talk about a strange summer. Between the continued threat of the novel coronavirus, a wobbly economy, and layoffs happening left and right, it’s no surprise that many who may have hoped to sell their home this season are wondering whether to put those plans on hold—or they’ve already thrown in the towel.

Such hesitancy is understandable. Yet the irony is that, after closely examining the current housing market conditions, many real estate experts believe this summer could be one of the best times to sell a home in years.

“Given the pandemic and uncertainty it’s caused, the general sentiment [among some owners] is that now is not a good time to sell your home,” says Danielle Hale, chief economist at®. “Yet so far, the data suggest the opposite—that buyers outnumber sellers in the housing market, which means it’s better to be a seller than a buyer.”

So if you’re a home seller who assumed they should write off this summer’s home-selling season as a lost cause, it’s time for a reality check! Here are a few reasons why the market could actually be moving strongly in your favor.

1. Home buyer demand is back with a vengeance

Granted, in the spring, when COVID-19 was spurring many states to enforce quarantine and ban open houses, home selling understandably went dormant for a while. But now that lockdown restrictions are loosening up in some states, home buyers are out with a vengeance—and many of them are eager to make up for lost time.

Indeed, the real estate market is already seeing strong signs of a rebound, according to the National Association of Realtors®’ Pending Home Sales Index (a forward-looking indicator of home sales based on contract signings). In May, after two months of decline, pending home sales shot up 44.3%—the highest month-over-month jump since 2001, when the index began.

“There’s very significant demand,” says Matthew Gardner, chief economist at Windermere Real Estate. He adds that demand is strongest right now in the suburbs and in smaller, cheaper cities—as buyers look to escape the biggest metros and more companies follow tech titans like Google, Amazon, and Microsoft in allowing employees to work remotely for the foreseeable future.

“If we continue to see an increase in working from home, people can move farther away, where they can get more bang for their buck,” Gardner says.


Watch: 5 Things to Know About Selling a Home Amid the Pandemic


2. Home inventory remains low

Yet amid this glut of home buyers, the number of homes for sale to actually meet this pent-up demand is at an all-time low.

“There was insufficient supply last year,” says Lawrence Yun, chief economist of the NAR. “This year during the pandemic, the shortage has intensified.”

According to’s market outlook, housing inventory in June was 27% lower than a year earlier.

And some reasons for the shortage of available homes have little to do with the recent coronavirus crisis. The number of homes for sale is at a “generational low,” says Gardner, because people are living in their homes longer than they used to. In fact, NAR data shows that Americans are spending an average of 13 years in their homes before moving.

The lower inventory is also the result of fewer distressed properties on the market, “due to the massive government stimulus support, including mortgage forbearance and generous unemployment benefits,” Yun explains.

3. Home prices are up

With demand for homes up and inventory down, the conditions are perfect for home sellers to get high prices.

“Many sellers can get top dollar in the current market conditions,” says Yun.

According to NAR , single-family home prices increased in most markets during the first quarter of 2020, with the national median single-family home price increasing 7.7%, to $274,600.

This good news may come as a surprise to sellers, since it was expected that the housing market would take a hit and home prices would drop because of the pandemic. That’s quite the contrary.

“Home asking price growth is actually higher now than it was before the pandemic,” Hale explains.

4. Mortgage interest rates are low, too

Another factor pushing home buyers to shop are the historically low mortgage interest rates.

According to Freddie Mac’s July 2 report, average interest rates recently reached a new record low of 3.07% for a 30-year fixed-rate mortgage. Given this means homes could cost potentially tens of thousands less over the lifetime of the loan, it’s understandable that mortgage purchase applications have jumped since last year.

5. The economy is showing slow signs of recovery

While the pandemic led to record high unemployment rates in March, these levels have recently fallen slightly, which could be a good sign that people are still eager and able to buy a home.

Continuing spikes in COVID-19 infection rates may have a negative impact on employment numbers in some areas going forward, but for now the national trends are heading in the right direction.

“The pandemic sharply curtailed economic production and consumer spending in March, April, and part of May. As a result, joblessness soared,” Hale explains. “But data from May and June suggests that businesses are adding back jobs as consumers get back to spending, and some companies are now scrambling to keep up demand. Some speculated that we’d see a sharp bounce back in activity, and I think it’s fair to say that’s what we’re seeing so far.”

6. Home buyers’ needs have changed

Along with working remotely, people have been spending more time at home in general—and this, in turn, has sparked a fresh deluge of home buyers whose current homes no longer seem as comfortable or roomy as they were pre-COVID-19. That is, if your dining table now doubles as your “office,” you might be tempted to trade in your short commute for another room or two so all can work from home in peace.

“People are looking at their existing home and saying, ‘If I have to work from home, then maybe my house just doesn’t work,’” Gardner says.

“Spending three months locked up at home taught a lot of people that where they live is important,” agrees Jed Kliman, managing broker at Windermere Real Estate in Seattle. “Clients I’ve been working with recently are trading up because they’ve spent more time in their homes and realized it didn’t meet their needs.”

Home offices, more privacy, outdoor spaces, and just more room are becoming more important to homeowners. Kliman says playing up these features and amenities when you sell your home can attract buyers. Home staging and visually appealing listing photos, though always important, are especially crucial in today’s market.

“Staging, professional photos, even video and 3D virtual tours—those are all really important because people start their home search online, and they have to be moved and captivated to go see a house,” Kliman says.

In addition to understanding market conditions, home sellers will want to know that the process from offer to closing may work a little differently today.

For example, social distancing may mean home inspections and repairs take a little longer. Kliman says some of his sellers have been doing their own pre-inspections and making reports available to interested buyers to speed up the process.

The bottom line: “You want to make it as easy as possible for a buyer to make an offer,” he says.

Just be prepared for the unexpected, Hale says.

“The time it takes to sell a home does seem to be shrinking, as states lift restrictions on business and consumers feel more confident and comfortable,” she says. “But depending on how infection rates evolve, this could change. This doesn’t mean we’re out of the woods completely.”


U.S. Pending Home Sales Fall 1.1% in October as Higher Prices Discourage Buyers

The numbers: A measure of pending home sales fell in October for the second month in a row, signaling the surprisingly strong surge in demand during the pandemic might be ebbing.

The index of pending home sales dropped 1.1% in October after a 2.2% decline in September, the National Association of Realtors said Monday.

While pending sales are still up 20% compared to a year earlier, rising home prices could be cutting into demand. Cooler weather and a record increase in U.S. coronavirus cases might also be hurting sales.

The index measures real-estate transactions in which a contract is signed, but the sale had not yet closed.

What happened: The South was the only major region to post an increase in pending sales, though just barely.

Pending sales posted the biggest decline in the Northeast.

The big picture: Record low mortgage rates and an increase in families leaving cities to escape the coronavirus have boosted home sales during the pandemic, leading to a flush in spending on furnishings and other related goods. The housing market has been a surprising bright spot for the economy.

Yet the spike in demand has reduced the inventory of homes for sale, which were already in short supply, to a historic low. That’s pushed up prices, discouraged would-be buyers — and could lead to softer sales in the future.

What they’re saying:  “The housing market is still hot, but we may be starting to see rising home prices hurting affordability,” said Lawrence Yun, NAR’s chief economist

Market reaction: The Dow Jones Industrial Average and S&P 500 both fell in Monday trades.


Pending Home Sales Fall for a Third Straight Month as Buyers Struggle To Gain Traction

The numbers: Contract signings for home sales fell for the third consecutive month in November — another indication of the challenges prospective home buyers are facing.

The index of pending home sales dropped 2.6% in November after declines in both October and September, the National Association of Realtors said Wednesday. The index measures real-estate transactions in which a contract is signed, but the sale had not yet closed.

Compared to last year, though, pending sales were still up more than 16%, showing the market’s continued resilience in spite of a severe shortage of homes for sale and fast-rising prices.

What happened: Pending sales fell across all major regions, unlike the month prior.

The largest decrease occurred in the West, where contract signings fell by 4.7%. The Northeast was next, followed by the Midwest and the South.

The big picture: The pending home sales index is the latest report to illustrate the difficulties home buyers are encountering in the housing market these days.

“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” Lawrence Yun, the chief economist at the National Association of Realtors, said in the report.

As has been the case for much of this year, there has been a serious shortage of homes for sale as sellers have remained reluctant to put their properties on the market. But demand is still up — both because of record-low mortgage rates and shifting preferences toward the suburbs.

The combination of low supply and high demand has pushed prices higher, which could be making home buying unaffordable for a growing swath of Americans.

What they’re saying: “After a tumultuous year that involved a huge drop in sales, followed by a quick rebound to new highs, November’s pending home sales suggest that the housing market is easing, taking a step back from the brisk fall when both spring make-up buying and fundamental interest drove sales higher,” said Danielle Hale, the chief economist at

Market reaction: The Dow Jones Industrial Average and S&P 500 both rose in Wednesday trades.