Economy Watch: Pending Home Sales Spike
- Dec 30, 2011
Pending U.S. home sales gained more in November than during any month since the frenetic run-up to the homebuyers tax credit in the spring of 2010, according to the National Association of Realtors on Thursday. The organization’s Pending Home Sales Index, which is based on residential contracts signed but not closed, advanced 7.3 percent to 100.1. A year earlier, the index stood at 94.5.
The last time the index was higher than 100 was in April 2010, when it reached 111.5. Yet because of the tax credit, that increase had an unsustainable, land-rush quality to it. Could this November’s relatively high pending sales be the beginning of some kind of real recovery for housing?
Maybe, maybe not. NAR chief economist Lawrence Yun posited in a statement that the gains may partly be the result of delayed transactions. But the catch is that a lot of contract signers never go on to close: “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” Yun noted. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,”
Weekly jobless claims rise, but still trending downward
Another spot of more-or-less good news this week came in the form of initial jobless claims, as reported by the U.S. Department of Labor on Thursday. For the week ending Dec. 24, the number of initial claims compared with the previous week was actually up 15,000 to 381,000.
Not good, but not that bad either, considering that the number is still below the benchmark of 400,000, which economists believe is the dividing line between a labor market moving in the right direction and one going the wrong way. The government’s numbers are seasonally adjusted, which takes some of the sting out of the number of temporary workers losing their jobs after Christmas, but the holiday might nevertheless have moved claims upward a little more than an ordinary week.
Commerce also reported that the four-week moving average for unemployment claims was 375,000, a decrease of 5,750 from the previous week’s revised average of 380,750. The four-week average is less volatile than the weekly gyrations, and has been trending down lately. The latest four-week number is the lowest that figure has been since just before the panic of Sept. 2008.
Sears unveils closure list
Following up on its post-Christmas announcement of unspecified store closures, tarnished retail giant Sears Holding Corp. was more specific about some of those closings on Thursday, releasing a list of 79 stores in various markets that will disappear soon—41 Sears and 38 Kmart stores, a majority of the 100 to 120 stores that the company says it will close in 2012 for being weaklings.
For its trouble, Sears was downgrade by Fitch Ratings ‘CCC’ from ‘B,’—which indicates “that substantial credit risk is present,” to use Fitch’s own definition. Or, put more plainly, junk that only Fred Sanford would love. According to the ratings agency, there’s “a heightened risk of restructuring over the next 24 months” if the retailer can’t tap new sources of liquidity.
Wall Street shook off its worries about Iran and Europe and such on Thursday, and perhaps investors took the better employment and housing numbers to heart. The Dow Jones Industrial Average gained 135.63 points, or 1.12 percent, while the S&P 500 was up 1.07 percent and the Nasdaq advanced 0.92 percent.