Suspended home sales can have an impact on different markets, especially those related to the real estate and housing sectors. Here are some of the ways it can affect the markets:
Housing Market: Monthly pending home sales are a key indicator of future existing home sales. The increase in pending home sales indicates a growing demand for housing, which can lead to higher sales volumes and possibly lead to higher house prices. This can benefit home builders, real estate developers, and related industries.
Mortgage and lending industry: Pending home sales data can affect mortgage demand and affect lending activity. When pending home sales increase, this indicates a potential rise in closed sales in the coming months, leading to an increase in mortgage applications and loan creation. Mortgage lenders and financial institutions may experience higher loan volumes during these periods.
Construction and Building Materials: With high pending home sales, this can indicate the need to build or renovate new housing. Homebuilders and construction companies may face increased demand for their services, leading to higher revenues and a potential rise in stock prices. In addition, suppliers of building materials and home improvement products may benefit from increased sales.
Real Estate Investment Trusts (REITs): Real estate investment funds specializing in residential or rented housing may be affected by changes in pending home sales. High pending sales can indicate potential rental demand, which can positively impact rental income and property values for housing-focused REITs.
It is important to note that the impact of pending home sales on markets can vary depending on other economic factors, such as interest rates, employment levels, and general economic conditions. Therefore, it is advisable to conduct a thorough analysis of various indicators and market trends to accurately assess the potential market impact.
Outstanding home sales are a key indicator of the real estate market
Monthly pending home sales refer to a key economic indicator that measures the change in the number of homes contracted for sale, but not yet closed, during a specific month compared to the previous month. It provides insight into the future direction of the housing market and is a key indicator of existing home sales..
The term “pending” indicates that a sales contract has been signed between the buyer and the seller, but the transaction has not been completed, usually due to conditions such as inspections, valuations or mortgage approvals that must be fulfilled before the sale can be completed.. .
The Pending Home Sales Report was released by the National Association of Realtors (NAR) in the United States. It covers a wide range of housing types, including single-family homes, condominiums, and cooperatives..
Investors and economists are keeping a close eye on pending home sales data as it provides valuable insights into the overall health of the real estate market. The positive percentage change indicates an increase in pending home sales, suggesting a potentially strong housing market in the coming months. Conversely, a negative change indicates a decline in pending home sales, which may indicate a weaker housing market..
The housing market plays an important role in consumer confidence and spending. Positive outstanding home sales data can boost consumer sentiment, as it points to a healthy housing market and potential accumulation of wealth for homeowners. Increased consumer confidence can lead to increased consumer spending on related goods and services, such as furniture, appliances, and home improvement products.
It is important to note that pending home sales data is subject to revisions, and final closed sales figures may differ from the initial reported figures. Therefore, it is advisable to consider multiple data points and trends when analyzing the housing market and making investment decisions..
Existing home sales contracts fall in April, conditions are expected to improve
Sales contracts signed on existing homes fell 7.7% in April compared to March, the slowest pace since April 2020, according to the National Association of Realtors.
These alleged pending sales are a forward-looking indicator of closed sales after a month or two. Pending sales were 7.4% lower than in April last year. Sales were expected to be flat compared to March.
Since the count depends on the contracts signed, it shows how buyers react to mortgage rates in real time. The average 30-year fixed mortgage interest rate ended in March at around 6.9% and then rose to 7.5% by the end of April.
As house prices continued to rise and supply was extremely low, leading to increased competition, this price jump had a significant impact on sales.
The impact of rising interest rates throughout April has led to a decline in home purchases, even as there is more inventory on the market.” “But the Fed’s expected rate cut later this year would lead to better conditions, while improving affordability and increasing supply.”
Sales fell in every region of the country, but fell sharply in the Midwest and West. The former has some of the most affordable markets in the country, and the latter has some of the most expensive.
“The likelihood of measurable declines in house prices appears to be very small. “The few markets that see price declines will be seen as a second chance for buyers to enter the market if those areas continue to add jobs,” Yoon added.
Perhaps in reaction to the slowdown in the pace of sales in April, the share of sellers who cut prices in May was 6.4%, the highest level since 2022. The average asking price also fell for the first time in six months.
