Pending Home Sales, Freddie Mac Delinquencies Down; U.S. Net Investment Position $4.4T Negative

The Pending Home Sales Index dropped in February. According to the Bureau of Economic Analysis, as of the fourth quarter of 2012, foreigners held about $4.4 trillion more in U.S. assets than U.S. interests owned overseas. And Freddie Mac delinquencies declined in February as well.

The National Association of Realtors said on Wednesday that its Pending Home Sales Index, a forward-looking indicator, slipped to 104.8 in February from a downwardly revised 105.2 in January. That might have been a drop month over month, but the index is considerably higher than February 2012, when it was 96.6.

The index represents residential contacts inked for a sale but not closed yet, and has been going up on a year-over-year basis each month for nearly two years. There’s some indication that going forward pending home sales might grow at a restricted pace this year, along with housing sales. That isn’t necessarily because the will to buy is lacking, but rather because of inventory shortages in many markets. 

“Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels,” Lawrence Yun, NAR chief economist, said in a statement. “Most local home builders are small businesses and simply don’t have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market.” 

U.S. Net Investment Position $4.4T Negative

On Wednesday, the Bureau of Economic Analysis released its first quarterly report on the U.S. Net International Investment Position. That is, how much is invested in U.S. assets by foreigners compared with how much is invested by Americans in foreign assets. 

According to the BEA, as of the fourth quarter of 2012, foreigners held about $4.41 trillion more worth of U.S. assets than U.S. interests owned overseas. The breakdown: about $25.17 trillion worth of U.S. assets were foreign owned as of fourth quarter of 2012, while Americans owned only $20.76 trillion in foreign assets.

The rationale for publishing these figures quarterly, the BEA said in a statement, is that “these new statistics are part of BEA’s effort to provide more frequent and timely statistics on cross-border linkages to help users better assess U.S. vulnerability to external financial shocks in the aftermath of the 2008 financial crisis.” The bureau anticipates releasing the statistics quarterly from now on. 

Freddie Mac Delinquencies Down 

Freddie Mac reported on Wednesday that its single-family serious delinquency rate declined in February to 3.15 percent from 3.2 percent, which is generally in line with the trend for that indictor during the last few years. The serious delinquency rate for the GSE was even further down compared with February 2012, when it was 3.57 percent.

The company defines “serious delinquency” as “three monthly payments or more past due or in foreclosure.” The rate peaked in February 2010, at 4.2 percent, and has been slowly going down since then. The “normal” rate – the historic norm, before the recession – was around 1 percent, and at the current rate of decline, it will still be late in the 2010s before that kind of normalcy is restored. 

Wall Street had a listless day on Wednesday, with the Dow Jones Industrial Average down 33.49 points, or 0.23 percent. The S&P 500 was off 0.06 percent, but the Nasdaq gained 0.12 percent.