Pendig Sales Up 4th Straight Month

The Pending Home Sales Index improved for the fourth straight month in May, though the gain was just 0.1%. Since last year, the index has now improved 6.7%. NAR's chief economist Lawrence Yun continued to say that poor appraisals were hurting the finalization process of homes transactions.

"Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions," he said. "Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy."

Regionally, results were volatile. The Northeast saw contracts move up 3.1% and the West improved 2.2%, but in the Midwest contracts saw a 1.3% decline, and in the South they fell 1.7%.
"Strong activity by entry level buyers is helping to absorb inventory and allow some existing owners to make a trade," Yun said.

The bad news from 10:00 was Construction Spending, which lost 0.9% in May, pushing the value to its lowest level in more than half a decade. Analysts were expecting a drop of 0.5%.
In addition, the 0.8% gain in April was revised down to 0.6%.

Details were pretty weak: residential construction fell -3.4%, as single-family homes declined 4.5% and multi-family homes plummeted 9.6%. On the plus side, private nonresidential construction inched up 0.5%.

"The construction spending figures should ultimately be lifted by stimulus-related spending on infrastructure projects as well as the bottoming of the housing market," said Deutsche Bank's Joseph LaVorgna. "We expect this to become more apparent later in the second half of the year."