Pending sales of existing U.S. homes dropped far more than expected in April to touch a seven-month low, a trade group said on Friday, dealing a blow to hopes of a recovery in the housing market.
U.S. consumer sentiment improved in May as job gains offset high gasoline prices, while inflation expectations diminished, a survey released on Friday showed.
MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & CO. IN SAN FRANCISCO
The bigger picture is that housing isn't really at the heart of the economic recovery in the first place so to see a down number like this while disappointing is probably not critical to the bigger picture in the economy.
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK
The pending home sales figure is very negative when taken at face value, but it's not clear that this is a valid reading. Compared to government releases, it's a small survey and still a bit experimental. Taken at face value, it's an indication that people have become unwilling to buy houses. Last month pending sales were relatively strong, but the actual existing home closings that occurred a month later were flat so a lot of contracts apparently were not financed. This month it looks like the willingness to buy at all seems to have evaporated.
The sentiment numbers were good. The inflation expectations were also a good result. The number from late in May declined from the early month reading for both the near-term and longer-term inflation expectations.
The five- to 10-year expectations are of great importance to the Fed because they amount to a vote of confidence in the Fed's ability to control inflation. We're finding out that the short-term inflation developments do impact short-term inflation expectations, but don't seem to be impacting longer-term inflation expectations.
JACOB OUBINA, SENIOR U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
Pending home sales saw a sizable increase earlier this year as people were front running the increase in PMI insurance. Now we are seeing some payback from that. This is a testament to the spring selling season and what we have at hand is pretty horrendous.
This paints a picture for existing home sales to fall back below the 5 million mark as pending home sales lead existing home sales by one to two months. There was absolutely nothing positive in this report. Housing remains in a depression right now. People are talking about a double-dip, but we never even recovered.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
Very disappointing. We kind of had a base-case scenario that housing was going to improve in the second quarter but now it looks like things are not getting off the floor at all.
This would offset any positive outlook for the economy. The Fed knows housing's weak, the Fed's still on the dovish side of the game. This is unlikely to affect policy, especially if this does turn out to be below the other data.
RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK
Pending home sales were pretty much a disaster, well below market expectations. They are saying this had to do with inclement weather, but overall the headline does not look good and this points to pretty dismal new homes sales and existing homes sales for May.
GUS FAUCHER, DIRECTOR OF MACROECONOMICS, MOODY'S ANALYTICS, WEST CHESTER, PENNSYLVANIA
There may some temporary factors like bad weather in the Southeast. Higher gasoline may be making potential home buyers a bit cautious. It is signaling further weakness in housing, but we do expect housing to turn around later this year. It just hasn't happened yet.
Lending has loosened up a bit. It's a not a good sign it's not happening yet. To get a really strong rebound in the economy, you really need some pickup in housing.
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY AT CRT CAPITAL GROUP, STAMFORD, CONNECTICUT
U.S. April pending home sales fell 11.6 percent from previous month, led by 17 percent drop in the South. Weather surely had an impact. March pending sales rose 3.5 percent, revised from a 5.1 percent gain. The (Treasury bond) market firms further.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
After March's unexpected 5.1% increase (now a softer rise of 3.5%), pending home sales sank by 11.6% in April to an index score of 81.9, more confirmation that surprise monthly readings reflecting the housing data eventually level out to general trend of a flat market at a depressed level.
While April's decrease is nearly four times that of March's gain, sales activity -- measured by signed contracts -- still reflects scores seen in the summer of 2010 just after the expiration of the tax credit, thus despite the magnitude of the decline, we've seen this weak level of activity before.
Pending home sales had indicated a positive existing home sales performance in April -- that didn't materialize -- so it would be safe to say that forthcoming sales data will post on the down side. Three of the four regions experienced lower activity, led by the South -- the largest home market-- with only Northeastern sales rising.