Although the Pending Home Sales Index decreased for the second consecutive month in September to its second lowest reading in 2015, the PHSI has increased year-over-year for 13 consecutive months. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased 2.3% in September to 106.8 from a downwardly revised 109.3 in August. However, the PHSI is up 3.0% from September a year ago.
The PHSI declined in all four regions in September, ranging from 0.2% in the West to 4.0% in the Northeast. Year- over-year, The West, Midwest and Northeast were up, ranging from 6.6% in the West to 3.9% in the Northeast. The South reported a small 0.1% decline from last September.
Although the PHSI declined the past two months, existing sales increased in September. Coming just three days after a surprisingly weak new home sales report for September, NAR attributed the PHSI decline to the “stubbornly-low inventory.” However, disappointing job creation numbers in August and September suggest the decline is a demand-side issue. Despite these recent reports, builder confidence reached its highest level in ten years, painting the prospect of a good year for builders in 2016.