LIVE MARKETS-Attic to cellar: Pending home sales jump, housing stocks sag

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

ATTIC TO CELLAR: PENDING HOME SALES JUMP, HOUSING STOCKS SAG

The U.S. housing sector has been volatile and inconsistent of late, with August data showing a down tick of existing home sales but new home sales surging 20.5%.

Additionally, homebuilder sentiment is dour, yet mortgage demand is on the rise.

And now, a surge in pending home sales.

Signed contracts for the sales of previously owned U.S. homes USNAR=ECI jumped by 4.0% last month, according to the National Association of Realtors (NAR), blasting past the sedate 0.2% increase analysts anticipated.

The index notched its highest reading since March, marking a robust rebound from July's 0.3% dip.

By region, the Northeast saw the only decline, dipping 1.1%. The Midwest jumped 8.7%, while the West and the South increased by 5.0% and 3.1%, respectively.

"Lower mortgage rates are enabling more home buyers to go under contract," writes Lawrence Yun, NAR's chief economist. "In the Midwest, low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions."

It should be noted that despite last month's increase, the pending home sales index is still hovering near its nadir in the wake of mandated COVID shutdowns, and the average 30-year fixed contract rate has been bouncing between 6% and 8% for the last three years.

"The housing market is beginning to thaw and we haven’t reaped the benefits of the recent slide in mortgage rates," says Ryan Sweet, chief U.S. economist at Oxford Economics. "Lower mortgage rates won’t just help boost home sales but also refinancing and that is a positive for near-term consumer spending."

Because pending home sales typically translate into actual sales a month or two down the road, the data's considered to be among the more forward-looking housing indicators.

But in the end, all economic data is backward-looking.

The stock market, on the other hand, reflects where investors expect a sector to be six months to a year in the future.

With that in mind, investors see cracks in the housing market's foundation. In the last 12 months, the S&P 1500 Homebuilding index .SPCOMHOME and the Philadelphia SE Housing index .HGX - have underperformed the broader market.

Measuring from Friday's close, the SPCOMHOME and HGX indexes are currently down 15.8% and 10.2%, respectively, over the last year, while the benchmark S&P 500 .SPX has advanced 15.8% during the same period.

(Stephen Culp)

EARLIER ON LIVE MARKETS:

S&P 500'S RECORD RUN SHOULD SET UP A STRONG Q4 CLICK HERE

WALL STREET SET FOR AN EVENT-PACKED WEEK AS GOVERNMENT SHUTDOWN LOOMS CLICK HERE

GRANOLAS: IS THIS THE BOTTOM? CLICK HERE

QUANTUM COMPUTING: BOFA SEES $4 BLN MARKET BY 2030 CLICK HERE

FTSE EDGES TOWARD RECORD AS HEALTHCARE STOCKS SURGE CLICK HERE

BEFORE THE BELL: FUTURES UP, LUFTHANSA CUTS JOBS, GSK CEO STEPS DOWN CLICK HERE

WHO NEEDS A GOVERNMENT ANYWAY? CLICK HERE