U.S. pending home sales drop in July, existing home sales likely to move sideways in months ahead

Pending home sales in the U.S. dropped in July. On sequential basis, pending home sales fell 0.7 percent, reversing most of the raises seen in June. The headline figure was considerably below consensus expectations of a rise of 0.5 percent. Sales were down in South and the West, falling 1.7 percent and 0.9 percent, respectively, driving the overall pending sales down.

The Northeast and the Midwest recorded slight improvement in activity in July, witnessing a rise of 1 percent and 0.3 percent, respectively. However, the pace was moderate compared to the previous month.

Pending home sales, on a year-on-year basis fell 0.5 percent as the drag from the softness in sales earlier in the year continues be a drag on the annual calculations. The subdued inventory situation of existing homes continues to restrain sales activity, noted Barclays in a research report.

Pending home sales measure housing contract activity and are based on signed real estate contracts for existing single-family homes, condos and co-ops. Around 80 percent of pending home sales are expected to become existing home sales in two months.

“As a result, we can expect existing home sales to move broadly sideways in the coming months in line with the trend in pending home sales”, added Barclays.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -101.603. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex