The National Association of Realtors Pending Home Sales index of contracts signed on existing homes surged 44.3% in May, its biggest gain since 2001. All regions were up, though the overall index is still down a smidge annually.
The NAR chief economist: “The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing home sales are now projected to be down by less that 10%.”
Plus: “All figures light up in 2021 with positive GDP, employment, housing starts and home sales.” Next year’s NAR forecast calls for sales of 5.35 million existing homes and 800,000 new ones.
REVIEW OF LAST WEEK
ECONOMY RECOVERS, STOCK MARKET TOO… Economic data has been encouraging for a while, but last week’s blow-out reports showed investors the economy really is headed back up, and stocks responded in kind.
Growing at the fastest rate ever, an astonishing 4.8 million new Nonfarm Payrolls were added in June, shattering forecasts, and dropping the unemployment rate more than two percentage points.
With the largest monthly gain in more than 40 years, the ISM Manufacturing Index revealed that key economic sector was growing again in June. Economists say full recovery is still a long way off, but there’s no question it’s begun.
The week ended with the Dow UP 3.2%, to 25,827; the S&P 500 UP 4.0%, to 3,130; and the Nasdaq UP 4.6%, to 10,208.
Cautious investors remained interested in bonds, supporting prices. The UMBS 3.5% ended up 0.05, at $105.22. In Freddie Mac’s Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate set a new all-time record low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… Compared to a year ago, home prices are higher, but monthly payments are lower, thanks to the drop in mortgage rates. The median asking price on homes listed in May 2020 was $18,000 higher than May 2019, yet the median monthly payment fell to $1,170 from $1,225 a year ago.
THIS WEEK’S FORECAST
SERVICES REBOUNDS, JOBLESS CLAIMS RECEDE, INFLATION OK… The economy’s services sector, providing most of our jobs, should climb close to a growth read from the ISM Non-Manufacturing Index. Going the other way, happily, is the forecast for Initial Unemployment Claims, while the Producer Price Index (PPI) is expected to show wholesale prices remain under control.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.