INDICATOR: May Existing Home Sales/Leading Indicators
KEY DATA: Housing Sales: up 4.2%; Median Prices (year-over-Year): up 15.4%/Leading Indicators: up 0.1%
IN A NUTSHELL: "Housing remains really strong and the soaring prices should help not only the residential real estate market but also consumer confidence and spending."
WHAT IT MEANS: Housing is the still the economy's leading light though how long that will be the case is anyone's guess. The huge back up in interest rates is likely to slow home sales at least to some extent. That might not happen for a while as people start buying before rates rise too much. Still, any moderation is unfortunate because demand through May was really solid. The National Association of Realtors reported that existing home sales rose above the five million units annualized sales pace for the first time in 3½ years and that was only because of government tax policies. The increase in demand was solid despite a modest drop in condo purchases. Single-family sales were strong. Geographically, every region posted a gain, so we are talking about broad based improvement. But the real eye-opener was the rise in prices. Median prices are up over fifteen percent in just one year while the inventory of homes for sale is down double-digit. That points to further increases in prices. With housing solid, it should not be a surprise that the Conference Board's Index of Leading Indicators rose again. While the increase was modest, it came on top of a robust gain in April, implying that the economy should continue growing.