Economy Watch: Pending Home Sales Continue Rising
The National Association of Realtor’s Pending Home Sales Index, a forward-looking indicator based on residential contract signings, but not closings, increased 6.7 percent to 112.3 in May from 105.2 in April.
By Dees Stribling, Contributing Editor
The National Association of Realtor’s Pending Home Sales Index, a forward-looking indicator based on residential contract signings, but not closings, increased 6.7 percent to 112.3 in May from 105.2 in April, NAR reported on Thursday. That’s a 12.1 percent above May 2012, when the index was 100.2, and in fact the highest level since December 2006, just before the U.S. housing market did a number on the rest of the economy.
The organization is now predicting that existing-home sales will increase 8.5 to 9 percent this year compared with last, reaching about 5.07 million units in 2013. That would be the highest annual number of units moved in seven years, and slightly above the 5.03 million recorded in 2007.
“Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” NAR chief economist Lawrence Yun noted in a press statement. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Income, savings edge up in May
Personal income increased $69.4 billion, or 0.5 percent, and disposable personal income—always the best kind—increased $57 billion, or 0.5 percent, in May compared with April, according to the Bureau of Economic Analysis on Thursday. May was a good month in that regard, since the month-over-month increase in April compared with March was only 0.1 percent for both personal income and disposable personal income.
People out spending some of that income—which the government refers to as “personal consumption expenditures”—was also up in May, increasing $29 billion, or 0.3 percent, compared with April. In April, personal consumption expenditures dropped 0.3 percent compared with the previous month.
Personal saving—which is disposable personal income minus personal outlays—was $387.6 billion in May, compared with $359.2 billion in April, the BEA said. The personal savings rate—personal savings as a percentage of disposable personal income, that is—was 3.2 percent in May, compared with 3 percent in April.
Initial claims back down
Initial unemployment claims yo-yoed back down again last week, the BEA also reported on Thursday. For the week ending June 22, initial claims were 346,000, a decrease of 9,000 from the previous week. The less moody four-week moving average came in at 345,750, a decrease of 2,750 from the previous week.
Wall Street continued in its positive mood—the Ben Bernanke/QE3 scare might just be a memory now—with the Dow Jones Industrial Average gaining 114.35 points, or 0.77 percent. The S&P 500 was up 0.62 percent and the Nasdaq advanced 0.76 percent.