Markets were heading lower on Monday morning as news was released that pending home sales sank lower than expected in August. The National Association of Realtors announced that the Pending Home Sales Index dropped 1% to 104.7. This fell below the 0.1% drop economists had been expecting. The activity level for last month dropped 2.2% lower then where it sat in August 2013. Even though there was a decline in the index, it still marks the second-highest level on record this year. It was also well above the 100 level which the group marks as “average” activity. Lawrence Yun, NAR’s chief economist, said, “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
In a separate report, U.S. consumer spending grew 0.5% in the month of August. The Commerce Department reported that August’s data was positive after remaining flat in July. The gain was partially attributed to a rise of 0.3% in income, which was slightly better than the 0.2% increase in July. The new data was further evidence for those projecting the economy to be gaining strength. Consumer spending data accounts for a staggering 70% of overall economic activity. Chris G. Christopher Jr. director of consumer economics at HIS Global Insight, said, “The August rebound on the spending front was broad based and driven by better than expected back-to-school spending and surging auto-sales. Consumers are holding up and this holiday retail season is looking significantly brighter compared to last year.”
Toyota Motor Corporation (TM) announced that they would be placing a recall on nearly 690,000 trucks. The issue will affect Tacoma 4X4 and Tacoma pre-runner pickup trucks models 2005-2011. The issue? The vehicles have a problem with their rear suspension system. The company said, “The involved vehicles’ rear suspension system contains leaf springs that are constructed of either three or four leaves. There is a possibility that a leaf could fracture due to stress and corrosion.” If the truck is continually used, it could break loose and affect other surrounding components of the truck. It could even break free and come in contact with the fuel tank, which could cause a leak. “In the presence of an ignition source, this could result in a fire,” Toyota said.
That’s all for today,
Warren Gates, Normandy Research