Economic review of last week

There was a lot of encouraging housing news last week. Nationally, the April Pending Home Sales came in UP 6.7%, rising for the third straight month and a 3.2% improvement over a year ago! The National Association of Realtors housing affordability index is near a record high and mortgage rates, while creeping up, are still at historically low levels. In fact, applications for purchase loans were UP 4.3% last week, according to the Mortgage Banker's Association.

Additionally, two large homebuilders reported that losses in the quarter ending April 30 had shrunk from levels of a year ago. They cited lower prices as the big draw for buyers, and the pace of price declines seems to be slowing. IHS Global Insight, a research firm, reported home prices fell on average at a 2.2% annual rate in Q1 of this year, a big improvement over the 12.5% drop measured in Q4 of last year.

Some experts say the economy has bottomed and we're beginning a "v-shaped" recovery. The week gave them ample support. April Personal Income was UP, with wages and salaries increasing for the first time in eight months! Personal Spending was down –0.1%, indicating consumers are still cutting spending. ISM Manufacturing increased in May, with new orders showing expansion, posting its highest reading in 18 months. China's manufacturing grew for the third month in a row, so the global economy may be recovering. There were also better-than-expected manufacturing numbers from the UK and the Eurozone. ISM Non-Manufacturing increased to its highest level since October. Even autos helped out, with sales up 6.4% for the month, the fastest rate of climb this year.

All of this is good news. Now is looking like a great time to buy a home before interest rates rise further and sellers start cutting incentives and standing firm in negotiations.