Recently released data on US Pending Home Sales rose in April by 6.7%, well above the Bloomberg consensus estimate for a gain of 0.5%. The rise is the largest since October 2001 and may help to confirm signals that the US housing sector has bottomed out. The index hit a low in January and has since climbed higher for three consecutive months. The figure often serves as an advanced reading on the housing market as the report cites approximately 80% of such pending sales will become transactions reflected in existing home sales data in the next two months. While such a large gain was unexpected, the index has seen significant volatility since housing prices began to fall in 2006. Looking deeper into the figure, seasonally adjusted month-over-month data showed increased sales in all regions except for a 0.2% dip in the South which includes Florida, a state that has seen a tremendous house price collapse in recent years. On an unadjusted basis, the midwest and south remain positive on a year-over-year basis for the second month while the west returned to contraction at 2.2% and the northeast narrowed it’s fall to 0.8% following three consecutive months of double-digit percentage declines. As expected earlier, markets opened slightly lower with lack of direction but have since bolted higher by more than half of one percent in the three main US indices. The Dow briefly crossed above into positive territory on the year marked at 8,776.39 while the euro, which appeared to be moving close to 1.42 has since climbed back above 1.427. Despite the upside early in the session, traders should keep their caution high as markets may still ultimately close lower.
[B]US Pending Home Sales Month-Over-Month Percentage Change[/B]