Pending Home Sales measure the change in the number of homes that are ready to be sold but await the closing transaction. New construction is excluded from the indicator.
Why is it important?
Housing industry is one of the pillars of the American economy. Lower home sales inevitably lead to decreasing construction activity in the country. Real estate market is tightly connected to the economic conditions. When the national economy is standing on the verge of a crisis, a decline in the number of new house acquisitions can be expected. The indicator, therefore, can be used to predict the well-being of the American economy, which, in turn, affects the exchange rate of the USD.
Practical application
A higher than expected reading should be taken as bullish for the USD, while a lower than expected reading should be taken as bearish for the USD.
The United States Pending Home Sales
The United States Pending Home Sales latest reading was -1.70% for the month of May 2017, missing the forecast reading of 2.0%, but at the same time being higher than the previous reading of -3.7% in April. The readings present volatility, having a peak number of 2.6% increase in February of 2017 and two consecutive latest monthly negative readings. The long-term average reading for the United States Pending Home Sales is 1.16% for the period of years 2002-2017, the all-time high reading was 30.90% in October of 2009, and the all-time low reading was -24.30% in April of 2011. On a 5-year period the trend of the Pending Home Sales is sideways, having peak values in 2012 and lowest values in 2014. From 2015 till present the trend is a downtrend, indicating a decreasing growth.