Interest Rate Roundup

Tuesday, February 02, 2010

Pending home sales inch up in December

Pending homes sales figures were just released for December. Here's what the numbers showed:

* Sales rose 1% between November and December. That was right in line with what economists were expecting.

* At 96.6, the index was up 10.9% from the year-ago level of 87.1.

* By region, pending sales were broadly higher. They climbed 2.2% in the South, 2.3% in the Northeast, and 5.2% in the Midwest. Sales fell 3.8% in the West.

The pending sales index stabilized at the end of 2009. That potentially sets the stage for a more positive spring selling season. Indeed, with mortgage rates low, house prices down, and the supply of homes for sale steadily falling, it's easy to see why the market should stabilize.

At the same time, we lack a catalyst for a vigorous recovery. Unemployment remains a problem and the housing market is still dealing with the "hangover effect" from the bubble -- too much foreclosure inventory, tighter lending standards, and so on. The result? We'll likely just muddle through instead of witness a V-shaped recovery like those that followed previous housing busts.


  • Until Uncle Sam stops pumping steroids into the housing market, it's impossible to gauge its true strength. That 10% increase over last year seems pretty moderate given that the year-over-year comparisons are quite easy - we were in the depths of the financial crisis and the government's deliberate efforts to pump up the housing market hadn't yet begun.

    It's an arguable question what happens when (and if) Uncle Sam pulls his support back.

    By Anonymous Anonymous, at February 2, 2010 at 4:56 PM  

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