The pending home sales report is considered a vital economic indicator, providing valuable insights into the expected trajectory of the housing market in the United States. This report examines the number of contracts signed for existing homes, as homes are typically under contract for a month or two before being sold. The Pending Home Sales (PHS) report precedes the Existing Home Sales report for the same time period.
The Pending Home Sales report, managed by the National Association of Realtors (NAR), tracks the volume of home sales in the United States where a contract has been signed but the deal has not yet been finalized. This report is considered a leading indicator, offering a glimpse into the future direction of the real estate market. An increase in the index value indicates a rise in pending home sales, which may ultimately lead to an increase in final sales and bolster the housing market. Conversely, declines in the index value may signal a market slowdown with an expectation of reduced future sales.
The Pending Home Sales report holds significant importance for several reasons :
1- Housing Market Health: Pending home sales serve as a gauge of the future performance of the housing market. An uptick in the pending sales index usually points to a near-future increase in final sales, indicating a robust real estate market. On the flip side, a decline in the index may suggest a slowdown.
2- Economic Activity: Since pending home sales often translate into final sales, their impact extends to various sectors, including construction, finance, and consumer spending on goods and services related to homes.
3- Policy Decisions: Policymakers, including the Federal Reserve, closely monitor the Pending Home Sales report to assess the health of the housing market and its broader impact on the economy. This information can influence interest rates, monetary policy, and financial measures.
The report is published by the National Association of Realtors (NAR).
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
