John Mijac’s view: Most public “market updates” are built on closed sales. Those numbers matter, but they’re late. If you want to guide clients with confidence, you need at least one indicator that updates in real time—before the closings show up in the headlines.
Lagging indicators: the rear‑view mirror
A lagging indicator measures outcomes after they happen. In real estate, the most common lagging indicator is a closed sale.
Why does that matter? Because a closing is the end of a chain: offer → acceptance → inspections → underwriting → escrow → recording. When you see “last month’s sales,” you’re usually seeing a market decision that occurred roughly 30–60 days earlier.
Common lagging indicators
- Closed sales (what successfully made it through escrow)
- Median sale price (a summary of past contracts)
- Closed‑to‑list price ratio (how negotiations resolved in prior weeks)
- Average/median days on market (often influenced by older listings)
Leading indicators: what buyers are doing today
A leading indicator measures activity that tends to occur before the outcome. In housing, one of the simplest—and most useful—leading indicators is under‑contract listings (often called pending sales).
National research treats contract signings as a forward signal because homes typically go under contract a month or two before they close. That’s why organizations like the National Association of REALTORS® describe pending sales as a leading indicator of housing activity.
Our brokerage’s leading indicator: listings under contract
In our brokerage, we keep a close eye on:
✅ The number of listings currently under contract (pending).
This is a clean, client‑friendly way to answer the question people actually care about:
“Is demand rising or falling right now?”
A simple comparison
- Closed sales = confirms what happened in the past.
- Under‑contract listings = shows what buyers are doing now, and often foreshadows future closings.
Why this matters for sellers
If under‑contract activity is rising, it often signals strengthening demand—even before the next wave of closed sales data catches up. If under‑contract activity is falling, it can signal hesitation and increased negotiation, even if last month’s closings looked strong.
- Rising contracts: more competition, faster decision cycles, tighter concession planning.
- Falling contracts: more price reductions, more credits, and longer marketing timelines.
Why this matters for buyers
Buyers win when they can see the shift early. Pending/under‑contract trends can help buyers decide whether to lean in (when competition is increasing) or negotiate harder (when demand is softening).
- If contracts are accelerating, expect tighter terms and fewer concessions.
- If contracts are slowing, expect more negotiating leverage and improved options.
Bottom line
Lagging indicators help us document history. Leading indicators help us understand the present and anticipate what comes next. In a fast‑moving market, that difference matters.
Key Takeaways
- Closed sales are a lagging indicator—they mostly describe the market from weeks ago.
- Under‑contract listings are a leading indicator—they show buyer decisions happening now.
- Our brokerage uses current under‑contract activity to keep client guidance aligned with real‑time demand.
References (external authority links)
- National Association of REALTORS®: Pending Home Sales Index (PHSI)
- NAR methodology: why pending sales lead closings
- Mortgage Bankers Association: Weekly Mortgage Applications Survey (leading indicator)
- FRED (St. Louis Fed): Pending Listing Count (U.S.)