Pending Home Sales Rise

Pending home sales unexpectedly rose for the second month in a row in October, growing +.6% MoM (consensus -1%). This follows a revision higher to the September data showing that pending sales of existing homes rose +1.4% MoM (prior estimate +.2%). Pending home sales represent initial agreements to buy previously lived-in homes, and tend to lead existing home sales by 1-2 months. Historically about 80% of pending home sales lead to existing home sales. The improvement in pending home sales, in the face of the current credit environment, is being taken positively, as a sign of possible stabilization in home buying demand following record declines in recent months. The pending home sales index has fallen 18% YoY.

Pending home sales rose 16% in the Northeast and 8.4% in the West. Purchases dropped -7.8% in the South and -1.4% in the Midwest. Year-over-year, pending home sales are down -24.4% in the South, followed by a -14.7% drop in the West, an -11.8% decline in the Northeast, and an -11.1% fall in the Midwest.