Pending sales of previously owned U.S. homes rose more than expected in May, a trade group said on Wednesday, but a glut of unsold properties remains a drag on the housing market.
STEVEN WOOD, CHIEF ECONOMIST, INSIGHT ECONOMICS, DANVILLE, CALIFORNIA:
Pending homes sales have been on a rollercoaster ride over the past 2 years because of the on-again, off-again home buyers' tax credits. After reaching a cyclical nadir in June 2010 after the expiration of the last home buyers' tax credit, pending home sales had been recovering, albeit irregularly. Home sales are still trying to find their fundamental level, unaffected by government stimulus programs that appear to have shifted the timing of home purchases but do not appear to have noticeably affected the level of home sales.
JAY FELDMAN, ECONOMIST, CREDIT SUISSE, NEW YORK:
It's up on the month, but the level is still tracking. It's still tracking below where it was in March. It's a little bit better than the consensus but the general story of housing is still kind of bouncing along the bottom. It came from a very low level in April.
It's an indicator for housing, but housing's not driving the recovery. It probably says existing home sales will take off a bit in the next 1 to 2 months.
Not sure you'll get a serious reaction to this number. I think markets are focused on other bigger stories right now.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:
According to the print it is firmer than expectations but in the bigger picture it is a correction from the exaggerated fall from April and it still leaves behind a disappointing trend and is really not pointing to much demand for housing.
Housing has probably bottomed and there is not much upside momentum, things are just hovering above the low levels. Coming after an over 11 percent fall last month it is really tough to get optimistic.
PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:
That is encouraging. I recall earlier this month or perhaps late last month where some new home sales numbers came out that were disappointing. And the realtor organization that put that out was pointing to their data indicating that sales were in fact ticking up and the reports should be improving. This provides confirmation of that so that is encouraging.
STEVE BLITZ, SENIOR ECONOMIST, ITG INVESTMENT RESEARCH, NEW YORK:
We are still below March, we are below November of last year.
When you look at the last few years, since the middle of 2007, if you take a way the surges from the tax credits that occurred at the end of 2009 and early 2010, you are looking at a number that averages around 85 to 90, and we're right in the middle of it. If you want to take a positive view on it, the home sales market has hit and continues to bounce along the bottom. It's not new news, but it's not deteriorating. It reflects that it's a big country.
We are churning at base level, not yet expanding and certainly not contracting.
GUS FAUCHER, DIRECTOR OF MACROECONOMICS, MOODY'S ANALYTICS, WEST CHESTER, PENNSYLVANIA:
It's one number but we have been expecting a turnaround in the housing market. You have home prices down substantially, mortgage rates are down, credit flows are picking up and the jobs market is still showing growth. The drivers of housing demand are improving, but it's dependent whether people have the confidence to buy homes.
I expect housing construction to pick up toward the end of summer.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
May's pending home sales index with a rise of 8.2% is well above the market consensus for a 3.8% gain, but less impressive than a 15% gain the persistently optimistic National Association of Realtors suggested was possible when they released the May existing home sales report. The rise should be seen in the context of a 11.3% (revised from 11.6%) fall in April that underperformed what is an unimpressive trend in existing home sales. May's rise looks simply like a correction from an April number that was even worse than the true picture. There is no sign of a housing market revival in this or any other recent housing sector survey. May's pending home sales level is close to consistent with that for May existing home sales while survey evidence for June, from the NAHB and MBA, is hinting at deeper weakness.
MARKET REACTION: STOCKS: U.S. stock indexes were little changed BONDS: U.S. bond prices were unchanged FOREX: The dollar gained slightly against the yen