Pending Home Sales Jump, End Losing Streak

Pending Home Sales Jump, End Losing Streak
Justin Sullivan/Getty Images
By Lucia Mutikani
and Jason Lange

WASHINGTON -- Contracts to buy previously owned U.S. homes rose in March for the first time in nine months, a sign the housing market could be stabilizing after suffering a setback from a rise in interest rates and a severe winter.

The National Association of Realtors said Monday its pending home sales index, based on contracts signed last month, increased 3.4 percent to 97.4. The increase beat economists' expectations for a 1 percent advance.

These contracts usually become sales after a month or two, and March's rise suggested home resales could rebound in the months ahead.

Sales stumbled last summer after that the U.S. Federal Reserve signaled it would soon reduce its economic stimulus efforts, pushing interest rates higher. A harsh winter also helped keep potential buyers out of the market.

%VIRTUAL-article-sponsoredlinks%"The stronger pending home sales report hints at resurgence in housing market momentum during the typically busier spring buying season," said Gennadiy Goldberg, a strategist at TD Securities.

Goldberg said the data suggested housing would continue to support U.S. economic growth in the coming months.

The U.S. economy hit a slow patch over the winter, which was particularly harsh in much of the country, but growth is expected to rebound during the rest of 2014. The U.S. Labor Department is expected to report on Friday the economy created 210,000 jobs in April.

Prices for U.S. stocks opened higher Monday, while the yield on 30-year U.S. government bonds rose following the release of the housing data.

Existing home sales had fallen to their lowest levels in more than 1½ years, but details of Monday's report suggested the downward trend in sales had probably run its course, with housing inventory rising and more first-time buyers coming into the market.

Despite last month's surge, pending home sales were still down 7.9 percent compared to March of last year.

Contracts increased in the Northeast, in the South and in the West. They fell in the Midwest.

9 Numbers That'll Tell You How the Economy's Really Doing
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Pending Home Sales Jump, End Losing Streak
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.
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