Economic Update – Pending Home Sales Reach for Unexpected Highs

The National Association of Realtors said Tuesday that its index of signed sales contracts, which is regarded as a harbinger of home sales in the very near future, spiked upward 6.7 percent nationally in April to 90.3. That much of a rise hadn’t been expected by analysts, and represented the quickest upward movement of the index since late 2001. A mixture of factors seemed to be driving buyers. Prices are down, first-time buyers have that $8,000 tax credit to spur them on, and until last week at least, mortgage rates were remarkably low. Regionally, the Northeast saw an enormous increase in pending sales–some 33 percent–while the Midwest experienced a 9.8 percent rise. Pending sales elsewhere were more-or-less flat. Pending home sales have been going up for several months now, but it doesn’t mean that the market is headed for the stratosphere (which would be another boom, and who wants that?). Unemployment and its doleful companion, foreclosure, haven’t stopped increasing just yet, and mortgage rates promise to be an unwelcome wild card in the housing picture. Red Bank, N.J.-based Hovnanian Enterprises Inc. has reported a second-quarter 2009 loss that was less than a year ago, which counts as good news in the homebuilding industry. Its loss for the quarter, which ended April 30, was $118 million, or $1.50 a share, compared with $340.7 million, or $5.29 a share, during the same quarter last year. Horsham, Pa.-based luxury homebuilder Toll Brothers Inc. will announce its second-quarter numbers on Wednesday, and it too is expected to offer up some good news, homebuilder-style. That is, a narrower loss than last year. Only a day after GM’s historic bankruptcy announcement, the beleaguered giant said that it found a taker for its Hummer division, which has been part of the company for 10 years. Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., privately owned and based in China, will buy the brand. CNNMoney reported that the CEO of Sichuan Tengzhong, Yang Yi, said that the deal “will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S.” Perhaps the company has some industrial miracle up its sleeve, since it would take that to make a Hummer “fuel-efficient.” Bulls still seemed to be in charge on Wall Street on Tuesday, though only a little. The Dow Jones Industrial Average closed up 19.43 points, or 0.22 percent. The S&P 500 was up 0.2 percent and the Nasdaq edged up 0.44 percent.