Thursday, April 26, 2012

Economy: Welcome Home

In the recent weeks it looked like that the economic upswing in the U.S. has slowed down a  bit. The latest data from the job market and from manufacturing were disappointing. But this morning we got economic numbers which are encouraging again. The index of pending home sales (a forward-looking indicator based on contract signings) rose in March 4.1% and is now 12.8% above March 2011 (calculatedriskblog).

"A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is completed within one or two months of signing," explains Marketwatch ( "Pending home sales are considered a leading indicator of progress in real estate because they track contract signings", writes Bloomberg (bloomberg).

This is another signal that the U.S. home market has reached it´s bottom and will rise in the coming months. Rising home sales should help to accelerate the general economic upswing because homeowners could feel more wealthy and spend therefore more generously for consumer goods (wealth effect). Stronger consumer spending could compensate for the sluggish job market and for weak exports because of the mess in Europe - at least partly.

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