Explaining the divergence between pending and existing sales

The gap that has developed between pending and existing home sales looks to be one more consequence of very low inventory levels. With such limited choice, buyers are increasingly reluctant to pull out once an offer has been accepted, leading to a rise in the share of pending sales which complete. We doubt that dynamic will change in the foreseeable future, meaning that the subdued level of pending sales is unlikely to pose a downside risk to the existing home sales data.