More individuals signed home buying contracts in February, however not in the numbers needed to compensate for a large January decline. Inflation driven by rising food and energy prices canceled out a reported increase in February consumer spending. Stocks rose on optimism regarding the new information on consumer spending and pending home sales, while some analysts are becoming optimistic about the housing market as well.
Inflation and consumer spending
The Commerce Department reports a rise from January to February in consumer spending. It went up 0.7 percent. This is the eighth month in a row where Consumer spending has gone up. Nevertheless, February's increase is matched to January's when adjusted to inflation to equal 0.3 percent. There was a food and energy price increase in February. This caused inflation. After rising 0.3 percent in January, the Commerce Department said the personal consumption expenditures price index rose 0.4 percent, the fastest rate recorded since June 2009. The increase in the consumption expenditures price index effectively canceled out February’s 0.3 percent increase in personal income. Households have also been dipping into savings to cover increasing food and energy prices. Savings dropped from $710.5 billion in January to $676.7 billion in February.
Have a look at economy depending on pending home sales
Pending home re-sales increased 2.1 percent in February after dropping 2.8 percent in January, in accordance with the National Association of Realtors. There was a drop from February 2010 though. It totaled a 9.3 percent drop. Pending home sales represent signed contracts. They are an economic indicator for this very reason. It’s only a few months’ later when the number affects existing homes 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. There was a 5.2 percent decrease from February 2010 in existing home prices which stops all increases since February 2002 in home values. The lowest recorded rate in new home sales occurred in February also. There was a 17 percent decrease in these sales. The median price for new homes dropped 8.9 percent from February 2010.
Is it going to get any lower
The prices of a home continue to fall which causes the National Association of Realtors to suspect that there could be a rise in existing home sales in 2011. This increase may be 5 to 10 percent even. You will find not very several people willing to purchase homes right now. This is regardless of the belief that it should be an investment individuals are willing to make considering how cheap the homes are. Renting a home costs more currently than it would to pay mortgages and homeownership costs in many markets, suggests Deutche Bank. In fact, 28 of the 54 major markets are this way. Owning a home is becoming a luxury many can start to better afford. Analysts feel like this should attract more buyers soon. The re-emergence of homebuyers could start raising housing costs in several markets, which could get even more homebuyers off the fence.
Citations
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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