Pending Home Sales Posts its Largest Ever Monthly Gain

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Economic Report Monitor #50
June 27th, 2020

Another quiet day economic day opens the last week of June trading which has been bearish so far. Indexes ended their rebounds off March bottoms as uncertainty over a resurgence in cases rises to limit hopes that the health crisis would be over quicker than expected. That does not seem to be the case. However, the real estate market looks to have shaken off that disappointment. The National Association of Realtor's (NAR) pending home sales report released today increased 44.3% in May after two months of declines. This is the highest one month increase in the series history. Despite the steep incline, year-over-year contract activity was still down -5.1%.  The NAR's chief economist Lawrence Yun suggests that the robust rebound in the housing sector "could lead the way for a broader economic recovery." With the strong report, the forecasts for existing-home sales and new home sales for 2020 were increased.


The Dallas Fed Manufacturing Survey in June also showed signs of bouncing. New orders jumped 34 points to 2.9 with nearly a third of respondents seeing an increase. Capacity and shipments both returned to reading positive as well. Rebounds in labor were less strong with employment at -1.5 and hours worked at -4.3. This trend was visible in other manufacturing surveys. Company outlook and uncertainty were mostly unchanged as about 40-45% of respondents marked "no change" in those categories. Future outlook readings also rebound and were stronger than current views. More half of the respondents see an increase in productions, capacity utilization, and new orders. Wages, employment, and hours worked are also expected to rebound at a stronger rate in 6 months. Capital expenditures are also expected to rebound from decreasing to increasing in 6 months. However, only 23.1% of respondents expect to see normal levels of revenue in that time period, so capital expenditures might also fail to return to normal as well.

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