October 4, 2010

Pending Home Sales Up; Factory Orders Down

Reports offer some hope, but nothing to get excited about

Figures released Monday by the National Association of Realtors and the U.S. Census Bureau showed that, while there appears to be light at the end of the tunnel, it’s more like a candle than a torch.

Pending home sales were up by a modest 4.3% to 82.3 on the index, for the second consecutive month. According to John Lonski, chief economist at Moody’s, while housing is recovering from its steep drop in the wake of the expiration of the home buyer’s credit in April, it’s “still very much in the hole” from where it was a year ago, when the index stood at 103.0.

“The good news,” said Lonski in a phone interview, “is that pending home sales are rising.” But after pointing out that the numbers are down 18.4% from a year ago, he adds, “Don’t get excited about it; housing went from an F to a D.”

He found U.S. factory orders, on the other hand, a cause for optimism.

“Capital spending looks good according to the new report,” he said. With aircraft, always a highly volatile measure, taken out of the equation, orders were up by 0.9%. Overall, he said, the indicators are up, and figures are up by 9.5% from a year ago; ex-transportation, up 10%, and ex-aircraft, up 20%.

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