U.S. pending home sales fall in August, existing home sales likely to soften slightly in months ahead

U.S. pending home sales dropped in August. On a sequential basis, pending home sales fell 1.8 percent sequentially in the month, extending the weakness in the previous month. The outturn was more subdued than the consensus expectations of a fall of 0.5 percent.

Sales dropped throughout the board with the West leading the pack, falling 5.9 percent. Sales in the Northeast, the South and the Midwest dropped at more modest rates. On a year-on-year basis, sales dropped 2.5 percent with the August drop in sales bringing the pace of fall down sharply from -0.7 percent year-on-year in July.

Pending home sales measure housing contract activity and are based on signed real estate contracts for existing single-family homes, condos and co-ops.

“About 80 percent of pending homes sales will become existing home sales within two months. As a result, we can expect existing home sales to soften slightly in the coming months in line with the trend in pending home sales”, added Barclays.

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