Existing Home Sales See Uptick in Places

The National Association of Realtors reported Monday that December existing home sales nationwide did not, in fact, decline as expected. The number of home sales was up 6.5 percent to a seasonally adjusted annual rate of 4.74 million. The reason why might lie in a combination of low mortgage rates, for those borrowers who can get mortgages, and geography. The Western states, which saw the most precipitous drop in prices since the housing bubble burst, saw existing-home sales rise 13.6 percent. The Northeast, by contrast, saw a drop in sales of 1.4 percent, which may hint that asking prices are still too high in that region, and will eventually drop further. The median existing-home price in the Northeast was $235,000, which is 7.8 percent lower than a year ago; but the median price in the West was $213,100, down 31.5 percent from December 2007. As poor corporate quarterly reports rolled in, Monday was also a day of pink slips, en masse. A who’s who of corporate America cut jobs: Caterpiller (20,000), Sprint/Nextel (8,000), Pfizer (8,000) and Home Depot (7,000), and Texas Instruments (3,400), among others. And how did the market respond to these new rounds of showing thousands of workers the door? “Meh,” it said. Up most of the day, down part of the day, the Dow Jones Industrial Average ended up 38.47 points, or 0.48 percent. The S&P 500 was up 0.56 percent, and the Nasdaq was up 0.82 percent. Higher unemployment might be bad news, but it isn’t really that shocking any more. The ongoing fracas over executive compensation, especially in the financial industry, has gotten all the more heated as details become known of the $4 billion in bonuses paid by Merrill Lynch in its death throes. Merrill ex-CEO John Thain told Maria Bartiromo on Monday that “the necessity to maintain the franchise is why you really have to pay–some amount of bonuses.” Which is something like keeping all those deck chairs on the Titanic all neatly arrayed to maintain the image of the ship. Merrill or no Merrill, the issue isn’t likely to go away for the rest of corporate America, as government, stockholders and public opinion presses hard to deflate the sense of entitlement in C-suites. “I don’t think we’ll see pay caps, but the federal government is going to start strongly discouraging non-performance based pay, and not only in the financial sector,” Patrick McGurn, special counsel for RiskMetrics Group, told CPN. “We’ll probably see legislation along those lines in 100 days.” Even the Chinese government is reportedly bothered by executive pay scales. It has warned state-owned financial companies to keep salaries at “reasonable” levels. What that means in the context of Chinese high finance is hard to say, but probably financial executives in that country are taking the edict seriously, since the government has been known (as in the case of tainted milk) to express its displeasure with corporate miscreants with a firing squad.