Economy Watch: Pending Home Sales, Personal Income Rise; U.S. to Pay Down Debt for First Time Since 2007
- Apr 30, 2013
The National Association of Realtors’ Pending Home Sales Index, a forward-looking indicator based on contract signings, rose to 105.7 in March from a downwardly revised 104.1 in February. That’s the highest the index has been in almost two years, and is 7 percent higher than the reading in March 2012, which was 98.8.
“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply,” NAR chief economist Lawrence Yun said in a statement. “Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses.”
The index is based on a large national sample, typically representing about 20 percent of transactions for existing home sales that have been inked, but not yet closed. An index of 100 is equal to the average level of contract activity during the baseline year of 2001, when NAR launched the index. By coincidence, the volume of existing home sales in 2001 fell within the range of 5 million to 5.5 million, which is considered normal.
U.S. Personal Income Inches Up
The Bureau of Economic Analysis reported on Monday that Americans’ total personal income increased $30.9 billion or 0.2 percent in March. Disposable personal income—after-tax income, that is—likewise rose 0.2 percent, to $20.7 billion. That was weak tea compared with February, when personal income increased $151.2 billion, or 1.1 percent.
Also during February, personal consumption expenditures (PCE, in government parlance) increased $21 billion, or 0.2 percent. Real PCE – which is adjusted to remove price changes, including the more volatile ones in energy — increased 0.3 percent in March, the same rate as in February.
Personal savings, which is disposable personal income minus personal outlays, was $329.1 billion in March, compared with $330.9 billion in February, noted the BEA. The personal saving rate — personal saving as a percentage of disposable personal income — was 2.7 percent in March, the same as in February. Savings spiked during the worst of the recession and have declined since then, though not to the lows of the early and mid-2000s, when the rate was often near zero.
Government Expects to Pay Down Debt in 2Q
The U.S. Department of the Treasury said on Monday that it anticipates paying down a tiny bit of the national debt in the second quarter – roughly $35 billion, which in federal terms is small potatoes indeed. Still, the payment will mark the first time since before the recession (the second quarter of 2007, to be precise) that the government won’t borrow to pay its expenses, as it has every quarter since.
The change is a function of increased revenue, especially spurred by the end of the payroll tax cut, and a drop in government outlays linked to the sequester. A comparatively healthy economy is also boosting revenue.
Wall Street had yet another up day on Monday, with the Dow Jones Industrial Average gaining 106.2 points, or 0.72 percent. The S&P 500 advanced 0.72 percent and the Nasdaq was up 0.85 percent.