LIVE MARKETS-Pending home sales throw surprise house party

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PENDING HOME SALES THROW SURPRISE HOUSE PARTY

Signed contracts for the pending sales of pre-owned U.S. homes USNAR=ECI jumped by 3.3% in November, according to the National Association of Realtors (NAR), breezing past the 1.0% consensus.

What's more, the number stands on the shoulders of October's upwardly revised 2.4% gain.

It was the index's highest reading since January 2023, and is likely supported by the slow, gradual cool-down in mortgage rates.

"The data shows the strongest performance of the year after accounting for seasonal factors, and the best performance in nearly three years, dating back to February 2023," writes Lawrence Yun, NAR's chief economist. "Improving housing affordability–driven by lower mortgage rates and wage growth rising faster than home prices–is helping buyers test the market."

"More inventory choices compared to last year are also attracting more buyers to the market," Yun adds.

Pending home sales are relatively forward-looking, as signed contracts tend to translate to actual sales a month or two down the road.

But in the end, all economic indicators are viewed through the rearview mirror.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year down the road.

With that in mind, investors seem to foresee leaky roofs and cracked foundations.

As of Friday's close, the S&P 1500 Homebuilding index .SPCOMHOME and the PHLX Housing index .HGX have underperformed the broader market by wide margins. The SPCOMHOME has eked out a 1.1% gain on the year, while the HGX is down 2.8%.

During that time, the S&P 500 .SPX has advanced 16.1%.

(Stephen Culp)

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