Pending home sales enjoyed a solid upswing, while incomes grew and layoffs retreated slightly.
Pending Home Sales
Pending sales of existing homes enjoyed a healthy enough jump in February to hit a 10-month high, according to last week’s release from the National Association of Realtors. The Association’s Pending Home Sales Index, which is based on contract signings, surged 5.5 percent to hit 112.3 in February, up from January’s 106.4.
Compared to the same period last year, this was 2.6 percent higher than February 2016’s index, and is the second highest monthly score since May 2006’s 112.5. This was a strong indicator that spring should see increased demand.
“Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country,” said NAR Chief Economist Lawrence Yun. “The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.
“Last month being the warmest February in decades also played a role in kick-starting prospective buyers’ house hunt,” he added.
NAR added in its report that it is projecting existing-home sales will grow approximately 2.3 percent from last year’s total of 5.45 million to hit approximately 5.57 million this year. The median existing-home price for 2017 is forecasted to rise roughly 4 percent.
Personal Incomes and Spending
Personal incomes saw a healthy increase in February, but consumer spending didn’t keep pace, according to last week’s report from the Bureau of Economic Analysis.
Personal incomes for February grew 0.4 percent, or $57.7 billion, the Bureau reported. Disposable personal income (DPI; income after taxes) also saw a solid gain, growing 0.3 percent, or $44.6 billion. The Bureau attributed February’s growth in personal incomes mainly to increases in wages and salaries, as well as rental incomes.
Meanwhile, personal consumption expenditures (PCE) notched up only 0.1 percent, or $7.4 billion, which was its smallest gain in six months. Moreover, real PCE — which strips out factors that impact prices — actually dropped 0.1 percent. The Bureau chalked up that decline to a decline in spending on services.
Looking at savings, February’s personal savings totaled $808.0 billion and the personal saving rate — which is personal savings expressed as a percentage of DPI — came in at 5.6 percent.
Initial Jobless claims
First-time claims for unemployment benefits filed by the recently laid off during the week ending March 25 dipped to 258,000, a decline of 3,000 claims from the preceding week’s total of 261,000, the Employment and Training Administration reported last week. While the market had expected initial jobless claims to drop to 245,000, the drop was welcome after the prior report’s gain.
The four-week moving average — considered a more stable measure of jobless claims — grew to 254,250, a gain of 7,750 claims from the previous week’s average of 246,500 claims.
While claims might have been up for this report, layoffs were still in safe territory. This marked the 107th consecutive week of claims falling below the 300,000-claim mark, a level that economists consider a sign of a growing job market.
This week, we can expect a light calendar of economic reports, due to the holidays:
Monday — Car and truck sales for March from the auto manufacturers; construction spending for February from the Census Bureau.
Tuesday — Factory orders and balance of trade for February from the Census Bureau.
Thursday — Initial jobless claims for last week from the Employment and Training Administration.
Friday — Consumer credit for February from the Federal Reserve; wholesale inventories for February from the Census Bureau; unemployment, payrolls, hourly earnings, and average workweek for March from the Bureau of Labor Statistics.