- Pending Home Sales for May fell 2.0% versus estimates of a .5% increase and a downwardly revised 3.1% gain in April.
BOTTOM LINE: The ISM Non-Manufacturing Index, a measure of the health of service companies which compose the largest part of the US economy, exceeded estimates and a measure of hiring accelerated. The employment component of the index rose to 57.4, the highest in 4 months. The export orders component of the index fell to 50 from 62. The prices paid index rose slightly to 59.8 from 57.9. This bodes well for a continuation of recent healthy economic data.
Contracts to buy previously owned US homes fell in May for the first time in four months while remaining close to a record. The May number was the third highest in history. The level of pending re-sales suggests rising prices may be discouraging some prospective buyers, however home buying remains very strong by historic standards. I continue to believe a period of stagnation is near with respect to home price increases. However, a significant decline in prices is unlikely.
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