Pending home sales dropped a whopping 8.7% in December. Pending home sales are counted when they go to contract, as opposed to when the sale closes, meaning pending sales lead existing home sales by a month or two.
Pending home sales YoY (white) vs Existing home sales YoY (yellow)
Bottom line: A disappointing December sales report suggests existing home sales are likely to slide further over the next couple of months. Going forward, further growth in the housing market will be predicated on consumers’ ability and willingness to finance additional mortgage debt. With stagnant income growth, this may prove more of a challenge than expected.
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