Home Sales Signal Potential Recovery

By: Ffd Analyst|2009-09-01 09:16:16
On Tuesday, the National Association of Realtors said its pending home sales index, based on contracts signed in July, rose 3.2 percent to 97.6, the highest level since June 2007, from 94.6 in June. Pending home sales contracts have risen for a record six straight months.

Analysts had forecast pending home sales to rise by 2.0 percent.

A nationwide slump in house prices for the first time since the Great Depression of the 1930s contributed to the credit crunch and contraction in economic activity in the past year, but recent housing data suggested home prices may have stopped falling.

Some stabilization in the three-year old housing downturn is seen as essential to any economic recovery.

Last week Standard & Poor's said prices of single-family homes rose for the second consecutive month in June, while the government said sales of newly-build single-family homes rose for a fourth straight month in July and the inventory of unsold new homes fell to the lowest in 16 years.

Earlier this month, the government said existing homes sales rose in July to mark the fastest pace in nearly two years.

Despite some optimism on manufacturing and the housing market on Tuesday, data also showed total U.S. construction spending fell 0.2 percent in July to the lowest rate since February 2004.