Pending home sales dropped 0.9% m/m in November, well below forecast (1.3%) and consensus (0.7%) expectations of a solid monthly increase. However, upward revisions to previous month's data boosted the y/y increase to 5.1%, above consensus expectation of a 4.0% y/y rise.
Sales increased modestly in the Midwest (1.0%) and South (1.3%), while large declines were noticed in the Northeast (-3.0%) and West (-5.5%). Despite some weakness since last summer, pending home sales have held up relative to existing home sales.
"We view the recent drop in existing home sales as temporary and expect these sales to rise back to a level more consistent with pending sales as lenders adjust to new mortgage disclosure rules. Nonetheless, the ongoing softness in pending sales suggests some risk to the housing market outlook in early 2016. Because the housing market is often a bellwether for the health of the consumer sector, we will be attentive to any further indication of slowing", says Barclays.
