Pending Home Sales Drop; Durable Goods Up
- Jan 29, 2013
The National Association of Realtors reported on Monday that its Pending Home Sales Index, a forward-looking indicator based on contract signings but not closings, fell 4.3 percent to 101.7 in December, from 106.3 in November. Year-over-year, however, the index is 6.9 percent higher than December 2011, when it was 95.1.
According to NAR chief economist Lawrence Yun, shortages of available inventory are limiting sales in some areas. “Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” he noted in a statement. “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing.”
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year NAR kept track of pending home sales. The volume of existing-home sales in 2001 fell within the range of 5 million to 5.5 million, which the association considers normal for the current U.S. population.
Durable Goods Orders Up Again
Durable goods orders jumped 4.6 percent in December, according to the Census Bureau on Monday, marking the fourth monthly increase. The rise was spurred by a large number of orders for military and commercial aircraft, which tend to have large but irregularly spaced impacts on durable goods spending.
Overall, durable orders were up 4.1 percent during all of 2012 compared with 2011. Take out transport-related goods, such as airplanes and cars, and orders were up 1.3 percent year-over-year in 2012. Transport-related goods orders were up 2.2 percent for the year, with cars providing much of the strength. Ward’s Automotive Group reported recently that cars and light trucks sold at an annualized rate of 15.3 million units in December, down only a bit from 15.5 million in November.
Increasing orders for durable goods bode well for the U.S. manufacturing sector in particular, and the string of monthly increases might show that demand for durable goods has momentum going into 2013. Any improvement this year in the economies of Europe or China will also help boost U.S. durable goods orders.
Wall Street was neither bull nor bear on Monday, with the Dow Jones Industrial Average ending down by 14.05 points, or 0.1 percent. The S&P 500 off 0.18 percent. The Nasdaq ended up 0.1 percent.