Economic Snapshot: Pending home sales mark fifth consecutive month of year-over-year gains

Pending home sales are seeing record-breaking increases this month, which indicates a strong year of home sales for 2015. And while this month’s report for private-sector employment may be lower than the previous month, consistent job gains above 200,000 continue to persist, which indicates strong job growth for the year. 

Pending home sales

The Pending Home Sales Index rose 1.7 percent to 104.2 in January, up from an upwardly revised 102.5 in December and 8.4 percent above January 2014. This is the highest level the index has seen since August 2013 and the fifth consecutive month of year-over-year gains.

The South saw the largest increase of pending home sales this month, up 3.2 percent this month to an index of 121.9, the highest the region has seen since April 2010. Pending home sales in the South are now 9.7 percent above the previous year.

The index in the West rose 2.2 percent this month and is up 11.4 percent from January 2014.

The index in the Northeast increased 0.1 percent to 84.9 in January, now 6.9 percent above the previous year. In the Midwest, the index decreased 0.7 percent this month but is 4.2 percent above January 2014.

Total existing-home sales in 2015 are expected to hit around 5.26 million, an increase of 6.4 percent from 2014, while the national median existing-home price for the year is expected to increase by nearly 5 percent. Existing-home sales declined 2.9 percent and prices rose 5.7 percent in 2014.

ADP employment report

Private-sector employment added 212,000 jobs in February. While this number is lower than January’s 250,000 jobs added, it marks the 13th consecutive month of job gains above 200,000.

Small businesses added the largest number of jobs this month at 94,000. Medium businesses added 63,000 jobs while large businesses added 56,000.

Service-producing jobs contributed the highest rate of new jobs this month with 181,000 jobs added. Within service-producing jobs, professional and business jobs increased by 34,000, followed closely behind 31,000 new jobs in trade, transportation and utilities. Financial activities added 20,000 jobs in February.

“Job growth is strong, but slowing from the torrid pace of recent months,” said Mark Zandi, chief economist of Moody’s Analytics. “Job gains remain broad-based, although the collapse in oil prices has begun to weigh on energy-related employment. At the current pace of growth, the economy will return to full employment by mid-2016.”

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