June 2, 2010 / 3:20 PM / 9 years ago

WRAPUP 3-US pending home sales at 6-mo high, loan demand falls

 * Pending home sales scale 6-month high on tax credit
 * Demand for home loans stuck at 13-year lows
 * Planned layoffs ease, back to pre-recession levels
 (Updates auto sales, markets to close)
 By Lucia Mutikani
 WASHINGTON, June 2 (Reuters) - U.S. pending home sales hit
a six-month high in April, data showed on Wednesday, but
falling demand for home loans pointed to ebbing activity in the
vital housing market due to the expiration of a popular tax
credit for buyers.
 Still, analysts believe any slowdown in home sales will be
temporary, citing a broadening economic recovery, low mortgage
rates and strengthening labor market. Data also showed planned
layoffs at U.S. companies drifting back to pre-recession
levels.
 "We have probably set ourselves up for a lower pace of
sales in late summer and fall. Fortunately, the very low
mortgage rates -- absent a tax credit -- continue to make
housing quite affordable," said Craig Thomas, a senior
economist at PNC Financial Services in Pittsburgh.
 The National Association of Realtors' Pending Home Sales
Index, based on contracts signed in April, increased 6 percent
to 110.9 -- the highest level since October and above
expectations of a 5 percent rise. It was the third straight
month of gains.
 But applications for loans to buy homes dropped last week
for the fourth straight week, holding at 13-year lows, the
Mortgage Bankers Association said.
 The surge in pending home sales, which lead sales of
existing home sales by a month or two, reflected a last-minute
rush by prospective homeowners to sign contracts before April
30 to qualify for a government homebuyer tax credit. Contracts
have to close by the end of June.
 The U.S. housing market, whose crash was at the epicenter
of the global financial crisis, is seen as a barometer for the
broader U.S. economy as it emerges from its worst recession in
70 years.
 Wall Street rallied on the housing report, with energy
shares bouncing back after Tuesday's beating. All three key
indexes ended up more than 2.2 percent.
 Prices for U.S. government bonds fell, while the dollar
rose to a two-week high against the yen following the
resignation of the Japanese prime minister.
 FORECLOSURES SHADOW
 While the housing market has stabilized thanks to
government support, an overhang of foreclosure properties is
slowing the momentum, although a firming labor market will lend
support.
 "Excellent affordability and the stabilization in payrolls
should facilitate a gentle recovery once the plunge following
the end of the tax credit is over," said Ian Shepherdson, chief
U.S. economist at HFE in Valhalla, New York.
 Another report showed the number of layoffs announced at
U.S. companies almost unchanged in May from April when they
touched a four-year low as employers were more upbeat about the
economic outlook.
 The planned layoffs data came just before the government's
much-anticipated monthly U.S. payrolls report on Friday, which
a Reuters survey forecast to show non-farm payrolls increased
513,000 in May after rising 290,000 in April.
 Although the economy has now grown for three straight
quarters and payrolls have expanded for four months, the
effects are yet to filter through to ordinary Americans.
 This is a key issue for the Obama administration with
congressional elections looming in November and American voters
seen in an anti-incumbent and anti-Washington mood.
 President Barack Obama said in Pittsburgh on Wednesday, he
expected to see robust job growth in Friday's employment
report, adding that the economy was getting stronger by the
day.
 "But that doesn't mean the recession is by any means over
for the millions Americans who are still looking for a job.
There is not going to be a real recovery until people can feel
it in their own lives," Obama said.
 In May, employers announced 38,810 job cuts, slightly more
than the 38,326 cuts in April, according to global outplacement
consultancy Challenger, Gray & Christmas.
 "Announced job cuts have, for all intents and purposes,
returned to pre-recession levels," said John Challenger, chief
executive officer of Challenger, Gray & Christmas.
 "What makes the low job-cut totals we have seen this spring
particularly remarkable is that we still have not reached what
is the slowest downsizing period of the year, which typically
occurs during the summer months," he added.
 The improving economy and labor market are boosting sales
of big-ticket items like motor vehicles.
 Major automakers recorded double-digit U.S. sales gains in
May from depressed year-earlier levels as industry-wide sales
ticked up for a seventh consecutive month with a boost from
orders by rental agencies, data showed.
 They expected industry-wide sales to be around an annual
rate of 11.4 million units up from the 11 million units that
had held from January through April. Sales are above the
27-year low of 10.4 million units recorded in 2009. For full
story, see [ID:nN02180660]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Pending home sales graphic   link.reuters.com/rat77k
Mortgage demand graphic     link.reuters.com/hem67k
June retail sales preview   link.reuters.com/weg67k
The U.S. housing market    [ID:nN19590716]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>








0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below