April 15, 2021

Contracts to Buy Homes Fall Slightly

WASHINGTON — Fewer people signed contracts to buy American homes in July, but the level stayed close to a six-and-a-half-year high. The modest decline suggests that higher mortgage rates have yet to slow sales sharply.

The National Association of Realtors said its seasonally adjusted index for pending home sales declined 1.3 percent, to 109.5 in July. That is close to May’s reading of 111.3, which was the highest since December 2006.

The small decline suggests that sales of previously owned homes should remain healthy in the coming months. There is generally a one- to two-month lag between a signed contract and a completed sale.

Final sales jumped to an annual pace of 5.4 million in July, the highest in three and a half years, the group said last week. Such a pace is consistent with a healthy housing market.

Higher mortgage rates appeared to have had a bigger impact on new-home sales, which plummeted last month. That raised fears that rate increases were restraining the housing recovery.

But many economists note that home prices and mortgage rates remain low by historical standards. Consistent job gains and rising consumer confidence may also support sales in the coming months.

“Higher mortgage rates are clearly negative for housing, but other key drivers — including the labor market, confidence and expectations for prices and interest rates — still point to improvement,” Jim O’Sullivan, chief United States economist at High Frequency Economics, said in a note to clients.

The average rate on a 30-year mortgage reached 4.58 percent last week, the highest level in two years and up from 3.35 percent in early May. Still, that is below the average since 1985 of about 7 percent, according to Bankrate.com.

Mortgage rates began to rise after the Federal Reserve chairman, Ben S. Bernanke, signaled that the Fed might reduce its bond purchases later this year. The purchases have helped keep borrowing costs low.

Rising home prices and more construction have bolstered economic growth and created more jobs. The housing recovery has provided crucial support to the economy when other drivers, like manufacturing, have struggled.

Gains in home prices may be starting to level off, however. Prices jumped 12.1 percent in June from a year earlier, according to the Standard Poor’s/Case-Shiller home price index released on Tuesday. That is slightly slower than May’s 12.2 percent year-over-year gain. But price increases slowed in June from May in 14 of the 20 cities tracked by the index.

The stabilization in prices is not necessarily a bad thing, economists said, because it could keep homes affordable and help prevent a bubble from developing in the housing market.

Article source: http://www.nytimes.com/2013/08/29/business/economy/contracts-to-buy-homes-fall-slightly.html?partner=rss&emc=rss

Slowing Global Demand Widens Trade Deficit

The Commerce Department said on Tuesday the trade gap increased 4.9 percent to $42.2 billion. In a sign of weak domestic demand, imports hit the lowest level in one and a half years.

“The report tells a tale of weakening economic growth momentum both domestically and globally,” said Millan Mulraine, a senior economist at TD Securities in New York.

Economists, who had expected the trade deficit to widen to $42.6 billion in October, said Hurricane Sandy could have disrupted trade flows. The storm, which struck the East Coast in late October, shut ports in New York and New Jersey.

However, the Commerce Department did not indicate that Sandy was a factor. The wider trade gap in October reflected a 3.6 percent decline in exports of goods and services to $180.5 billion. That was the biggest percentage drop in exports since January 2009.

Exports have been one of the pillars supporting the economy since the 2007-9 recession ended. The slide in October’s export growth was telegraphed by weak manufacturing surveys and reflected slowing global demand.

Imports of goods and services fell 2.1 percent, to $222.8 billion, in October, the lowest since April 2011. Economists said the decline in imports was hardly surprising, given a weakening in consumer demand in recent months.

In October, the inflation-adjusted trade deficit narrowed to $46.2 billion from $46.6 billion in September. While that implied trade would make another small contribution to gross domestic product in the fourth quarter, economists said the size of the decline in exports raised the bar high for that.

In addition, a strike by West Coast dock workers in late November and early December most likely reduced trade last month.

A third report showed confidence among small-business owners fell in November; economists pinned that on the fears of deep government spending cuts and higher taxes, which could drain about $600 billion from the economy early next year.

The National Federation of Independent Business said on Tuesday that its optimism index fell 5.6 points to 87.5 last month, the weakest reading since March 2010.

While exports to the 27-nation European Union rose 1.4 percent in October, there were substantial declines in goods shipped to France, Germany, Italy and Britain. Exports to the European Union in the first 10 months of 2012 were down 0.7 percent compared to same period in 2011.

American exports to Latin America also fell in October, and shipments to Japan were down 8 percent.

Although exports to China, which have been growing more slowly than in recent years, surged 23.1 percent in October, imports rose to a record. That pushed the United States’ trade deficit with China to a record $29.5 billion.

Article source: http://www.nytimes.com/2012/12/12/business/economy/decline-in-exports-hurts-us-trade-deficit.html?partner=rss&emc=rss