Instant View: Snow hits pending home sales; factory orders fall

NEW YORK (Reuters) - New orders at U.S. factories rose 1.7 percent in January, led by a big jump in orders for commercial aircraft, while contracts for pending sales of previously owned homes unexpectedly fell in January.

PENDING HOME SALES:

FACTORY ORDERS:

KEY POINTS: * The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December. * Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, would rise 1 percent in January. Compared to January 2009, the index was up 12.3 percent. * Factory orders were expected to increase by 1.8 percent, according to those polled by Reuters. Factory orders for December were revised up to 1.5 percent. New orders have risen in nine of the last 10 months. * Transportation equipment orders rose 15 percent, the biggest increase since July 2009 as orders for commercial aircrafts and parts soared 118.6 percent. * Excluding transportation, new orders rose just 0.1 percent. But that was still the sixth consecutive monthly increase. Inventories increased 0.2 percent in January, following a 0.2 percent drop in December. It was the third rise in the last four months.

COMMENTS:

BRUCE ZARO, CHIEF TECHNICAL STRATEGIST, DELTA GLOBAL ADVISORS, BOSTON:

"By and large they're pretty good.

"I would look as well to productivity and costs. Productivity would be chalked up to fewer workers doing more and when you cut those workers would be a big component of costs declining more than expected.

"But I view this as the good data set as opposed to last week when we got some indications the data set was not so good."

TOM SCHRADER, MANAGING DIRECTOR, U.S. EQUITY TRADING, STIFEL NICOLAUS CAPITAL MARKETS, BALTIMORE:

"Not much of a reaction (in stocks). Pending home sales data were horrible. I'm surprised we're not getting some reaction.

"Factory orders were just a shade light, revised down. Everything that came out this morning was close, but not quite."

STEPHEN MASSOCCA, MANAGING DIRECTOR, WEDBUSH MORGAN, SAN FRANCISCO

"Obviously the pending home sales continues the string of crappy home numbers. It's pretty clear that every one has overestimated how well the home market is going, it's pretty clear that it's not going that well. People are still keeping their money in their pocket to a large degree. So even though businesses may be out spending it's pretty clear that a lot of consumers are still frightened to spend and people are frightened by the real estate market.

"Despite the perceived bargain in terms of rent to purchase price for homes, where it looks like we are at a historical low in terms of value relative what you would pay to rent something, people continue to keep their hands in their pockets. Not an unusual reaction given to what happened in 2008. On the negative side there that points to continued fear -- there is a lot of wood to chop before the home building/home selling market gets better."

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK, NEW YORK:

"Overall this was a very disappointing housing report. The fact that the declines were broad-based in not a good sign. The extension and expansion of the home buyer tax credit has not made an impact yet, but then again we may see a last minute rush in demand as we did last year before the original expiration. There is still softness right now and home buyers appear to be delaying their decision to buy or are waiting for the last minute. It is still fair to say that the housing market has stabilized, but there is more uncertainty in what type of recovery we will see. In my view, we will have a turbulent recovery."

JAMES MEYER, CHIEF INVESTMENT OFFICER, TOWER BRIDGE ADVISERS, WEST CONSHOHOCKEN, PENNSYLVANIA

"The data presents a mixed picture, but we had some good news earlier with the retail sales and jobless claims data. That should be the focus today."

"I take January and February pending sales data with a grain of salt because of issues like the weather and the expiration of the tax credit, though I think that's having less and less of an impact. However, I think this shows that housing will remain in the doldrums for a while. There's so much inventory to work through. That said, this isn't as bad as the headline appears. The builders I talk to are seeing a steady increase in traffic."

FACTORY ORDERS

"The interesting thing about the factory orders is that there was a big snapback in the fall because of rebuilding inventory. Some of that is catching up to us now, with unfilled orders flattening out. It suggests that manufacturing is catching up again from retooling. However, retail sales came in pretty good despite the snow, and the consumer is what's going to drive the economy from here."

DANA JOHNSON, CHIEF ECONOMIST, COMERICA, DALLAS:

FACTORY ORDERS: "The trend in factory orders is positive and fits together to other encouraging data on manufacturing.

PENDING HOME SALES: "It reflects two things - the severe weather in some parts of the country that held back sales and we are still feeling the effects from the uncertainty over the extension of the first-time home buyer credit. There is a modest recovery in housing that is being obscured by those factors."

MEG BROWNE, SENIOR CURRENCY STRATEGIST, BROWN BROTHERS HARRIMAN, NEW YORK:

"Pending home sales is a negative for the U.S. though a lot of other factors are positive. It is sign that the housing market is losing some momentum. Pending home sales are forward looking and will help set the tone for February. They are likely to show up in existing home sales. It is not the only factor in the market with nonfarm payrolls tomorrow but it is a slight negative for the dollar."

MARKET REACTION: STOCKS: U.S. stock indexes held gains BONDS: U.S. Treasury debt prices pared losses DOLLAR: U.S. dollar slipped against the yen