Economic Snapshot: Pending home sales continue record-breaking trends

Photo credit to Dan Moyle

Pending home sales continue to get closer and closer to that June 2013 high and at this rate could even surpass it in the coming months, which is cause for much optimism.

However, the volatility of consumer confidence will have to be closely watched as we get further into 2015, as the latest report continues a monthly trend of rising and falling consumer confidence. We will also have to keep a close eye on the second and third estimates of the GDP, as this first estimate is disappointing but is based on source data that is incomplete or subject to further revision.

Pending Home Sales Index

Pending home sales in March reached 108.6, a 1.1 percent increase from the upwardly revised 107.4 in February.

The index is now 11.1 percent above March 2014, increasing year-over-year for seven consecutive months, and is at its highest level since June 2013.

Pending home sales in the Northeast fell 1.5 percent to 80.2, marking four straight months of declines but is still 0.6 percent above the previous year. In the Midwest, the index declined 2.5 percent to 107.5 but remains 11.3 percent above March 2014.

Pending home sales in the South climbed 4.0 percent to an index of 126.5 and are 12.4 percent above the previous year. The index in the West increased 1.7 percent to 103.7 and is now 15.6 percent above March 2014.

Consumer confidence

The Consumer Confidence Index decreased to 95.2 in April, down from 101.4 in March. The Present Situation Index decreased from 109.5 to 106.8 and the Expectations Index fell from 96.0 to 87.5.

Consumers who say business conditions are “good” declined from 26.7 to 26.5 percent but those who claim business conditions are bad also decreased from 19.4 to 18.2 percent. Those stating jobs are “plentiful” declined from 21.0 to 19.1 percent and those claiming jobs are “hard to get” rose from 25.5 to 26.4 percent.

The percentage of consumers expecting business conditions to improve over the next six months decreased from 16.8 to 16.0 percent and those expecting conditions to worsen increased from 8.1 to 9.4 percent.

Those anticipating more jobs in the months ahead decreased from 15.3 to 13.8 percent and those anticipating fewer jobs increased from 13.6 to 16.3 percent. The proportion of consumers expecting growth in their incomes declined from 18.8 to 18.3 percent and the proportion expecting a decline rose from 9.7 to 11.2 percent.


Real gross domestic product increased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “advance” estimate release by the Bureau of Economic Analytics. In the fourth quarter of 2014, real GDP increased 2.2 percent.

The increase in the first quarter primarily reflected positive contributions from personal consumptions expenditures (PCE) and private inventory investment. These contributions were partly offset by negative contributions from exports, nonresidential fixed investment and state and local government spending.

Real PCE increased 1.9 percent in the first quarter, compared with an increase of 4.4 percent in the fourth of 2014. Real nonresidential fixed investment decreased 3.4 percent in the first quarter, compared to the increase of 4.7 percent in the fourth of 2014. Investment in nonresidential structures decreased 23.1 percent, in sharp contrast to an increase of 5.9 percent last quarter.

Real exports of goods and services decreased 7.2 percent in the first quarter of 2015 after increasing 4.5 percent in the fourth of 2014. Real federal government consumption expenditures and gross investment increased 0.3 percent in the first quarter, compared to a decrease of 7.3 percent in the fourth.

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