Today's Report (11/29/2021)

Pending home sales increased in October, rebounding after a decline the month prior, according to the National Association of Realtors. Contract activity rose month-over-month in each of the four major U.S. regions. On a year-over-year basis, however, transactions were split, as two regions reported drops and two others posted gains.

"Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later," said Lawrence Yun, NAR's chief economist. "This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.

"The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years."

While the market is expected to remain robust, Yun forecasts home prices will rise at a gentler pace over the course of the next several months and expects demand to be milder as mortgage rates increase.

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What Is It?

The National Association of Realtors (NAR) Pending Home Sales Report measures the change in the number of homes under contract to be sold but still awaiting the closing transaction. The report excludes new construction.

What Are The Fundamental Effects?

If there are more pending home sales, it can show that consumers are more confident and are able to buy homes, take out mortgages and borrow more money to cover the costs. However, if the figure comes in lower than expected, it can show consumers are not confident to spend money on previously owned single-family homes.

How Does It Affect The Markets?

CURRENCY - It can generate some volatility for the dollar. A higher than expected reading is generally bullish for the dollar.

STOCKS - A higher than expected reading is taken as a good sign for stocks, as consumers are viewed as more confident in their spending, which could lead to higher stock prices.

BONDS - Reaction is generally muted unless the economy is edging closer to overdrive and faces an eruption of inflation pressures. A higher than expected reading is taken a bad sign for bond investors, as it can lead to lower bond prices and higher yields.