April contract signings of existing homes fell a sharp 11.6% m/o/m, well more than expectations of a drop of just 1%. The Pending Home Sale index is at the lowest since Sept and is down 26.5% y/o/y from the tax credit induced spurt last year. The Northeast eked out a small gain but the sales drops in the Midwest, South and West were sharp. Whether it was the known reasons of economic concerns, weather disasters in the South, and tight lending standards, the industry drag remains a major problem for the nation’s household wealth and health of the US banking system which is betting their balance sheets that home prices don’t double dip which they seem to be in the process of doing.
The final May UoM confidence figure at 74.3 was almost 2 pts better than expected, up from the preliminary reading of 72.4 and 69.8 in April. Both Current Conditions and the Outlook rose about 2 pts as it looks like the decline in gasoline prices off its peak had a positive influence as one year inflation expectations fell to 4.1% from 4.4% in the preliminary report and 4.6% in April. The level is still very elevated as it compares with a 20 year average of 2.9% but the direction certainly helps. AAA said last night that gasoline prices fell for a 14th straight day and .17 over the time period to $3.81.