An increase in pending home sales in February was not enough to offset the big slide in contract signings reported in January. consumer spending also rose in February. However the statistical gain was offset by an adjustment for inflation because of ascending costs on energy and food. But the minutely good data on pending home sales and consumer spending boosted stocks Monday and some real estate experts think the housing market might have bottomed out.
Inflation and consumer spending
consumer spending in February increased 0.7 percent compared to the month before, according to the Commerce Department. February has a 0.3 percent increase really when adjusted for inflation which makes it match January's report for Consumer spending although technically it rose for eight months in a row. Rising food and energy prices pushed up inflation in February. The fastest rate since June 2009 was recorded by the Commerce Department in the personal consumption expenditures price index increase. In January it was 0.3 percent while going to 0.4 percent in February. The increase in the consumption expenditures price index effectively canceled out February’s 0.3 percent increase in personal income. In order to cover increasing food and energy prices, households have been going into savings. Savings dropped from $710.5 billion in January to $676.7 billion in February.
Look into economy depending on pending home sales
Pending home re-sales increased 2.1 percent in February after dropping 2.8 percent in January, according to the National Association of Realtors. Compared with February 2010 pending home sales fell 9.3 percent. Pending home sales represent signed contracts. They’re an economic indicator for this very reason. It is only a few months’ later when the number impacts existing houses sales data. This is after the contract is complete. There was a 9.6 percent decrease in February in existing home sales which accounts for 95 percent of today's market. The median price for existing homes dropped 5.2 percent from February 2010, erasing all increases in home values since February 2002. New home sales plunged 17 percent in February to the lowest rate ever recorded. The new home sales median price decreased from February 2010 as well. There was an 8.9 percent decrease.
Is it going to get any lower
In 2011, the National Association of Realtors expects that there could be an overall increase of 5 to 10 percent in existing home sales. Very few people are buying regardless of the truth that housing has become so affordable it should be one of probably the most attractive investments in the U.S. In 28 out of 54 observes markets, Deutche Financial institution claims it is cheaper to pay all homeownership costs including mortgages than it is to rent. Owning a home is becoming a luxury several can start to better afford. Analysts feel like this is supposed to attract more buyers soon. Several people might start wanting to purchase which could raise costs a little bit. This might make more people interested in purchasing a home.
Information from
Bloomberg
bloomberg.com/news/2011-03-28/pending-sales-of-u-s-existing-homes-unexpectedly-climbed-2-1-in-february.html
New York Times
nytimes.com/2011/03/29/business/economy/29econ.html?src=busln
Fortune
finance.fortune.cnn.com/2011/03/28/real-estate-its-time-to-buy-again/
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