FED: MNI Instant Answers Questions For FOMC

Pending home sales rose 4.0% M/M in August, handily above the 0.4% expected and the -0.3% reported in July. This was the highest index reading in 5 months, suggesting a potential pickup at the end of a weak period. 

• Pending sales rose solidly in three of four regions, with Northeast sales falling.
• Data released the prior week showed existing home sales remaining steady (4.00M SA Ann, versus 4.00M 6-month average), in contrast with soaring new home sales (+20.5% M/M, to the highest rate of sales since January 2022).
• Pending sales remain well below pre-pandemic levels, signalling similar for existing sales in coming months.
• The drop in lower mortgage rates seen in recent weeks has potentially helped encourage activity (most notably in new sales), with the NAR's Chief Economist noting in the pending sales report that "Lower mortgage rates are enabling more homebuyers to go under contract."
• That being said, affordability remains limited and a meaningful recovery continues to look elusive.

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• We are now less than two months away from the UK Budget (26 November), an event that could have huge significance on many levels for markets.
• We look at the impacts of increasing VAT - on CPI, fiscal revenue and monetary policy.
• We also look at the expected revenue from raising income tax or employees national insurance (NICs).
• The measures could have significant long-term implications on UK growth (including both consumption and incentives for companies to invest), monetary policy, long-term fiscal sustainability as well as the amount of gilts that will need to be issued in coming years.
• Media reports suggest that the Treasury expects around a GBP30bln fiscal hole that will need to be filled. And these reports came out before the disappointing August data.

• MNI: US NAR AUG PENDING HOME SALES INDEX 74.7 V 71.8 IN JUL
• US NAR AUG PENDING HOME SALES +4.0% MOM; +3.8% YOY