Pending Home Sales: July 2011

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for July showing home sales declined with the seasonally adjusted national index dropping 1.3% since June but increasing 14.4% above the level seen in July 2010.



Meanwhile, the NARs chief economist Lawrence Yun suggests that conditions for buying should improve given that buyers can use real estate as an inflation hedge... only catch, that's assuming that home prices stop deflating! In both nominal and real terms home prices are still falling considerably.



"The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market."



The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Bull Trip!: GDP Report Q2 2011 (Second Rough Estimate)

Today, the Bureau of Economic Analysis (BEA) released their second "estimate" of the Q2 2011 GDP report showing that the economy continued to weakly expand with real GDP increasing at an annualized rate of just 1.0% from Q1 2011.



On a year-over-year basis real GDP increased 1.55% while the quarter-to-quarter non-annualized percent change was 0.25%.



The latest quarterly results revealed an notable 5.1% decline in durable goods from Q1 2011 while non-durable goods showed the slowest growth since 2009 and the overall personal consumption expenditures registered the weakest showing in six quarters at 0.4%.



Government spending declined notably with the non-defense spending declining 7.5% from Q1 2011 while state and local spending declining 2.8%.



Non-residential structures supposedly expanded at an annualized rate of 15.7% from Q1 though future revisions will likely revise down this value resulting in an even weaker (possibly sub-1%) growth for the second quarter.

Kansas City Fed Manufacturing Survey: August 2011

The Federal Reserve Bank of Kansas City, like other district FRBs (New York, Philadelphia, Richmond and Dallas), tracks its region’s manufacturing activity by surveying a number of important indicators such as general activity, production, shipments, orders, employment and prices for raw materials and finished products.



The latest results are indicating that the manufacturing expansion remained at a near-contraction level of 3 since last month while the employee index improved slightly to 8 and the prices paid for raw materials declined to 28.



The following chart plots the seasonally adjusted Composite index since 2001 with the solid red line indicating the threshold between expansion and contraction.