Economy Watch: Pending Home Sales Decline
- Oct 29, 2013
The National Association of Realtors said on Monday that its Pending Home Sales Index dropped to 101.6 in September from a downwardly revised 107.6 in August. The index is also below September 2012, when it was 102.8. In fact, it’s at the lowest level since December 2012, when the index came in at 101.3.
The NAR data reflect contracts inked but not closed, so it’s considered a forward-looking indicator. The organization chalked up the drop to the fact that housing affordability is declining as prices rise. Also, government and contract workers were on the sidelines recently, insecure about their future during the shutdown.
NAR chief economist Lawrence Yun noted that September was the first time in 29 months that pending home sales weren’t above year-ago levels. “This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014,” he said. “Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year.” So it might not be another bubble.
Industrial production up, but manufacturing not so much
Industrial production increased in September by 0.6 percent, according to the Federal Reserve on Monday, coming on the heels of a 0.4 percent gain in August. For the third quarter as a whole, industrial production rose at an annualized rate of 2.3 percent.
Manufacturing added relatively little to the September gain, according to the Fed, edging up only 0.1 percent for the month, and at an annualized rate of 1.2 percent for 3Q13. Production at mines moved up 0.2 percent in September and advanced at an annualized rate of 12.9 percent for the quarter. The output of utilities rose 4.4 percent in September following declines in each of the previous five months.
Industrial production has been rising since the end of the recession, but the sector still isn’t firing on all cylinders. The index for total industrial production in September was equal to its 2007 average and was 3.2 percent above its year-earlier level. Capacity utilization for total industry, on the other hand, moved up 0.4 percentage point to 78.3 percent, a rate still 1.9 percentage points below its long-run average (1972-2012).
Single-family delinquencies decline
Freddie Mac reported on Monday that the single-family serious delinquency rate declined from 2.64 percent in August to 2.58 percent in September. The GSE’s rate is down from 3.37 percent in September 2012, and the current rate is the lowest since April 2009. The company’s definition of delinquency is mortgage loans that are “three monthly payments or more past due or in foreclosure.”
Wall Street had a bumpy up-and-down day on Monday—industrial output disappointed, but a lot of individual earnings reports were strong—and ended the day mixed. The Dow Jones Industrial Average lost a microscopic 1.35 points, or 0.1 percent, while the Nasdaq was down 0.08 percent. The S&P 500 eked out a 0.13 percent advance.