Pending Home Sales Up; Banks Doing Better; Durable Goods Orders Up, Except Airplanes

The NAR's Pending Home Sales Index increased 4.5 percent month to month, showing more evidence that the housing market found its legs. Net income for U.S. banks was up by more than a third year over year between fourth quarter 2011 and a year later. And minus a drop in airplane orders, durable goods orders were sharply up by 6.3 percent month over month.

More evidence that the housing market has found its legs: pending home sales were up in January, according to the National Association of Realtors on Wednesday. The NAR’s Pending Home Sales Index, which is based on contracts inked but not closed, increased 4.5 percent to 105.9 in January from a downwardly revised 101.3 in December. The index is 9.5 percent above January 2012, when it was 96.7.

The January 2013 index is the highest reading since April 2010, when it hit 110.9, just before the deadline for the homebuyer tax credit. But that was a temporary high, brought about for political reasons. Aside from spikes induced by the tax credits, the last time there was a higher reading was in February 2007, when the index stood at 107.9.

NAR chief economist Lawrence Yun says he expects about 5 million existing-home sales this year. Price growth, however, could exceed 7 percent in 2013 if inventory supplies remain low (and so far, there’s every indication that they’ll be low this year). Previously, the Realtors had expected 5.1 million existing-home sales in 2013, while prices were forecast to rise 5.5 to 6 percent, but anemic inventories seem to be having an impact.

Banks Doing Better

The FDIC’s Quarterly Banking Profile, which was released this week, reported that net income for U.S. banks was up by more than a third year-over-year between 4Q11 and 4Q12, despite the fact that their interest income was down. Net income was pumped up by noninterest income and lower provisions for loan loses.

By noninterest income, the report is referring to “primarily by higher gains on loan sales (up $2.4 billion, or 132.4 percent, over the fourth quarter of 2011), increased trading revenue (up $1.9 billion, or 75.3 percent), and reduced losses on sales of foreclosed property (down $1.2 billion, or 72 percent).”

The report also said that the percent of noncurrent loans and leases during the fourth quarter of 2012 fell to 3.6 percent, the lowest rate since the end of 2008, from 3.68 percent in the previous quarter and 4.19 percent in the fourth quarter of 2011. The carrying value of one-to-four family REO properties held by FDIC lenders dropped to about $8.33 billion at the end of December 2012, down from about $8.76 billion at the end the third quarter and about $11.63 billion at the end of 2011.

Durable Goods Orders Up, Except Airplanes

The U.S. Department of Commerce reported on Wednesday that overall durable goods orders dropped 5.2 percent in January compared with December, but that was because of a sharp drop in airplane orders. Take out aircraft, and durable goods orders were actually up sharply, 6.3 percent month over month, largely on the strength of machinery and manufactured metal products.

Wall Street seemed genuinely not worried about the sequester on Wednesday, with the Dow Jones Industrial Average up 175.24 points, or 1.26 percent. The S&P 500 gained 1.27 percent and the Nasdaq advanced 1.04 percent.