Economy Watch: Pending Home Sales Up
- Apr 30, 2013
The National Association of Realtor’s 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 in fact 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 press 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 2001, which was the first year that the NAR published this particular 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, while disposable personal income—after-tax income, that is—was up $20.7 billion, which was also 0.2 percent. That was weak tea compared with February, when total 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 increase 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, but more recently has come down, but not to early- to mid-2000s lows, 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 U.S. debt in the second quarter of this year—roughly $35 billion, which in federal terms is small potatoes indeed. Still, the payment will mark the first time since before the recession (2Q07) that the government won’t borrow to pay its expenses, as it has every quarter for more than five years.
The change is a function of increased revenue, especially spurred by the end of the payroll tax cut, and a drop in government outlays because of the sequester. A relatively healthy economy (at least when compared with 2009 or ’10 or ’11) 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.