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The Week Ahead: Tracking the Path of Pending Home Sales

The National Association of Realtors’ Pending Home Sales Index (PHSI), which is based on contract signings, reversed its course in September with an increase after a notable dropoff in August.

Increases in the West and South were largely responsible for September’s turnaround. Will pending home sales continue their upward climb October? The industry will find out on Wednesday, November 30, when NAR publishes its latest report.

Following September’s 1.5 percent climb up to a level of 110.0, pending home sales are at their fifth-highest level over the last year and have increased in 22 of the last 25 months.

“Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” NAR Chief Economist Lawrence Yun said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”

“Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” NAR Chief Economist Lawrence Yun said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”

November 2016 Employment Summary—Bureau of Labor Statistics, Friday, December 2, 8:30 a.m. EST

The Federal Reserve will be watching the newest BLS employment summary closely to determine if the labor market has improved sufficiently enough to raise the federal funds target rate in the Federal Open Market Committee’s meeting on December 14. The new BLS employment situation will be published on Friday, December 2, at 8:30 a.m. EST.

Job gains in October’s report fell slightly below expectations (161,000) but the unemployment rate remained below 5 percent (4.9 percent) and hourly wage growth jumped by 8 cents up to $25.92 (and increased by a combined 18 cents in September and October).

Zillow Chief Economist Svenja Gudell said wage growth was “especially important, as the nation’s most expensive housing markets are home to a growing share of the nation’s jobs. In order for housing to remain affordable in these areas, wages need to grow alongside housing costs.”

National Association of Federal Credit Unions Chief Economist Curt Long said, “While October’s job gains fell slightly below expectations, large upward revisions to prior months more than made up for it. Wage growth ticked up to 2.8 percent versus a year ago, which is the highest rate since 2009. From the Fed’s perspective, (October’s) report supports a rate hike in December.”

This Week’s Schedule

Wednesday, November 30
Pending Home Sales Index for October 2016, NAR, 10 a.m. EST

Thursday, December 1
Construction Spending for October 2016, Census Bureau, 10 a.m. EST

Friday, December 2
Employment Summary for November 2016, BLS, 8:30 a.m. EST

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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