U.S. stocks inched higher today continuing a recent pattern of drifting upwards without a big show of enthusiasm. The catalyst today was good news—solidly good news—on sales of new homes in April. The annualized rate jumped to 433,000, up 6.4% from March
After Fed chair Janet Yellen warned last week that “The recent flattening out in housing activity could prove more protracted than currently expected,” I was hoping that today’s numbers on new housing starts and building permits would show that the Fed’s worries were overblown. Nope.
Tighter credit policies have been a drag on the U.S. economic recovery. But according to the Federal Reserve’s most recent survey, banks eased lending policies for commercial and industrial loans in the first quarter. For individuals, the Fed found easing in policies for consumer credit card and auto loans and a mixed picture for prime mortgages and home equity lines of credit
More bad news from the housing sector today. New home sales fell 14.5%in March to 384,000 from a revised 449,000 in February. This news comes after yesterday’s disappointing sales of existing homes. Sales of existing homes dropped in March for a third consecutive month
If the housing sector is still supposed to be the lead engine for the U.S. economy, that engine seems to be slowing down. The numbers this morning show that sales of previously owned homes fell in March for a third consecutive month. Housing prices climbed 6.9% in February from February 2013. That would be good news—except that the increase is the smallest gain in a year.
It’s an indication of the strength of this market that the S&P is hanging at this level despite a warning about slow global growth and deflation from the International Monetary Fund and a weak report on U.S. housing starts in January that showed a 16% drop in January from December
The news on Iran has led to selling of Japanese yen, oil, and gold as investors and traders have decided that the world isn’t as risky a place as it was just a few days ago. The Japanese yen, the world’s favorite safe haven currency, fell 0.45% against the dollar to 101.71. West Texas Intermediate fell 0.89% to $94 a barrel and gold declined 0.17% to $1242 an ounce.
The index of pending home sales fell a whopping 5.6% in September. That’s the biggest drop in more than three years, according to the National Association of Realtors. The decline marked the fourth straight monthly drop in pending sales. Economists surveyed by Bloomberg had expected an unchanged reading for the month.
The week has begun with optimism that the housing recovery and consumer spending will continue to support decent U.S. economic growth. The week, however, ends with the Thursday, May 2, meeting of the European Central Bank and Friday’s report on U.S. employment growth. I wouldn’t be surprised to see stocks pause in midweek
The lower than expected numbers from the housing sector today and yesterday look like nothing more than a pause after a big move over the last twelve months.
