July 29th, 2015 11:35 AM
Pending Home Sales down 1.8% while investors wait for a Fed Interest Rate Hike
While investors and banks wait impatiently for a Fed meeting with Janet Yellen and a possible interest rate hike, the pending home sales report was released showing a drop of 1.8% in June. Not the indicator Janet Yellen would want to see if she is going to raise interest rates.
Why is this so important?
The pending home sales index provides a gauge to measure the demand for housing which is a major overall factor that can affect the direction of our economic market. If people are not buying homes; that means people don’t have money to buy a new home. If people don’t have money, how can you justify raising interest rates on an economy hanging on by a thread?
With growing fears that China will not be able to artificially hold up their economy and stock market, another fear is born. A fear that a house of cards is about to collapse and could ripple around the world. If a small country like Greece can cause such havoc and turbulence in the U.S. stock market, imagine what a collapse in China would do.
We have just not been seeing the economic numbers we would like to see. Consumer confidence was blown away yesterday compiled with another bad housing report from Case-Shiller. Now we get even worse news on the housing market today showing a similar drop in home sales.
Janet Yellen may raise rates in September, but how far can she really go? What can the consumers in our economy really afford especially when it comes to their mortgage? All we can do is wait and see. Will the benefits of waiting to raise rates past September really a good idea? Or is it time to just go for it and take the consequences, whatever they me be?
We continue to wait for Janet Yellen.