One again, Lawrence Yun, the NAR’s chief economist, noted that tight lending standards continue to hamper the existing home market.
Based on anecdotal evidence from realtors, he is probably correct, but his assertion that “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy” is a bit premature in my view.
Potential buyers continue to fret over the direction of home prices, and others who would like to move are finding it difficult to sell their current home or are unable to fetch a price that would leave them with the necessary equity to invest in a new house.
Further, job insecurities and lackluster consumer confidence, along with competition from foreclosures, remain a headwind.
Spending powers ahead
A welcome surprise for an economy that has been awash in weak data. Consumer spending grew by a healthy 0.8% in July. A rebound in purchases for durable goods, including autos, led the way but gains were broad-based.
Even accounting for a rise in headline inflation, real spending, or spending adjusted for inflation, increased by a solid 0.5%, the best reading since December 2009.
But the overall trend remains lackluster, as the slowdown in income growth – compliments of weak employment growth – hinder spending.
Additionally, the debt ceiling debate that has sapped confidence may not manifest itself in the numbers until August. Stay tuned.
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