Pending Home Sales Showing A Little Momentum

Boosted by low mortgage rates and an improving jobs market, home sales are beginning to show a little momentum with pending home sales up 0.3 percent in September. This is a small gain but nevertheless hints at growth ahead for existing home sales, final sales of which have been up-and-down all year though up in last week's report for September.

Looking at pending sales, which are defined as contract signings, strength is led by a 1.4 percent rise in the South which is by far the largest housing region and the region where sales are strongest. Right behind at plus 1.2 percent is the Northeast with the Midwest and West both showing declines at minus 1.2 percent and minus 0.8 percent.

One subtle plus in the report is the year-on-year trend which, after spending most of the year in the minus column, is back on the plus side at 1.0 percent, modest but a move in the right direction. Aside from rates and jobs, another positive for home sales is the softening underway in prices, clearly evident in Case-Shiller whose next report will be posted Tuesday at 9:00 a.m. ET.

Recent History Of This Indicator:
The pending home sales index decreased 1.0 percent in August. Year-on-year, pending home sales in August were down 2.2 percent. A lack of first-time buyers and strong demand for rentals remain key obstacles for home sales. A lack of distressed homes on the market is another negative factor.