IV Macro Policy & Sovereign Debt
Pending home sales
A leading US index of signed sales contracts for existing homes that have not yet closed.
How it works
The National Association of Realtors (NAR) publishes the index every month. It counts signed sales contracts for single-family homes, condominiums and co-ops, and excludes newly built homes.
Because contracts usually close within one to two months, the index runs one to two months ahead of the same body's existing home sales data, which measures completed transactions. That makes it one of the earliest readings of a turn in the housing market.
The index is a level indicator rather than a count of contracts, and the series begins in 2001. Monthly changes are calculated on a seasonally adjusted basis; an unadjusted year-on-year comparison can give a different result. Because cancelled contracts never close, the index can diverge from completed sales.
Why it matters here
Housing is the first channel through which long-term rates reach the real economy: the 30-year mortgage rate tracks Treasury yields and sets a household's monthly payment directly. When the long end does the tightening without the central bank moving its policy rate, this index shows how far that tightening is denting demand months ahead of official growth data. It is an early warning for the Fed's next move, and therefore for emerging markets' funding costs.