US Pending Home Sales Report is presented by the National Association of Realtors which publishes the Pending Home Sales Index report, PHSI; an indicator to any changes in the housing contract activity and is considered to be a leading economic indicator in the housing market activity, the US Pending Home Sales Report. The Pending Home Sales Report is formed on the basis of the number of real estate contracts that are signed for existing condos, homes and co-operative socities. Due to the fact that a signed contract doesn’t necessarily mean as a sale unless a transaction is made, it is therefore not considered as a sale, the PHSI index does not include constructions in its measure.
The Pending Home Sales Report is released once every 4 weeks from the date of release of the previous report at 10AM EST, 3PM GMT. From the data that is sampled from Multiple Listing Services (MLSs) and large real estate brokers, the Pending Home Sales Report Index offers solid information which eventually reflects on future home-sales activity in the US and indicates any changes in the direction of the market than any of the indicators currently available.
The Pending Home Sales eventually move into the Existing Home Sales Index a few months later. Which is why the Pending home sales index can be used to predict the actual home sales activity.
Pending Home Sales Report – How is it done
When the seller accepts a sale contract on a property, it is entered into the MLS as a pending home sale. The National Association of Realtors collects information from various MLS and real estate brokers, where this sample size makes up for 50% of the Existing Home Sales Index as most of the Pending home sales tend to become existing home sales within two months of time. Although not all Pending home sales materialize it does not affect the PHSI report as data is mostly an aggregated trend. The fallout rates, or cancellations are closely monitored by the NAR every month with selected MLS’s. In the event of any abnormal changes to the trend, due adjustments are made to the index in order to correct the discrepancies.
2001 was the first year when the Pending Home Sales Index was started. Therefore an Index of 100 is considered to be equal to the average contract activity of 2001. So an index of 100 is read as a high level of activity on the pending home sales front.
When then Pending Home Sales Report comes out higher than expected, then it usually results in a bullish run for the USD, while a lower than expect result is more on bearish side of the USD.
The Pending Home Sales Report is considered to be a good indicator of the US economy and gives good insights into the housing market activity. While there are other statistical reports such as Housing Starts, Mortgage Applications, New Home sales, none of them come close to being a leading indicator on the existing home sales report.