Pending Home Sales, Manufacturing Activity Booms in January

Feb. 1, 2018

One month into the new year, economic forecasts for pending home sales and manufacturing activity appear strong in the U.S., the latter of which is also gaining momentum across the globe.

Wells Fargo Securities released a report of pending home sales on Jan. 31, in collaboration with the U.S. Department of Commerce and National Association of Realtors (NAR), that showed a 0.5% rise in the association’s pending home sales index in December. Pending sales rose in the South and West, but fell in the Northeast and Midwest.

Wells Fargo Senior Economist Mark Vitner and Economic Analyst Hank Carmichael said in the report that the gain in pending sales also indicates strong existing sales and closings. Some buyers’ decisions may have been the result of rising mortgage rates as well as their expectations of more rate hikes.

“Pending sales reached their highest levels since March,” the report stated. “Price appreciation has also shown no signs of slowing down behind supply issues.

In the manufacturing sector, solid activity is expected in the U.S., according to Reuters. The industry is booming in the eurozone, where the 19-country bloc’s fast output in January exceeded paces last seen more than two decades ago. IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) fell only a point below the December 2016 reading; however, the United Kingdom (U.K.) factory PMI dropped, which economists said was most likely related to Brexit discussions.

“The U.K. economy looks set to grow at half the rate of the U.S. in 2018 and a full percentage point slower than the eurozone,” James Knightley, chief international economist at ING, said in the Reuters report. “It should be doing much better given the global upturn in demand and the competitive sterling exchange rate.”

—Andrew Michaels, editorial associate

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