Positive signs in economic reports

Michelle Jamrisko / Bloomberg News

WASHINGTON — Orders for durable goods and the number of Americans signing contracts to buy an existing home rebounded in May, easing concern the world’s largest economy is faltering.

Bookings for goods meant to last at least three years rose 1.1 percent, the first increase since February, a Commerce Department report showed Wednesday in Washington. Pending home sales climbed 5.9 percent after slumping 5.5 percent in April, according to data from the National Association of Realtors.

“The economy is growing, but it’s still muddling through,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who forecast a gain in durables orders and pending home sales. “Concerns about the collapse of manufacturing are grossly overblown. We’re in a housing recovery.”

The increase in demand for U.S. durable goods followed a revised 0.2 percent drop in April that was previously reported as little changed. Orders fell 6.8 percent in the first four months of the year, the weakest stretch since the same period in 2009, during the recession.

“May looked OK, but the trend is still relatively soft,” said Michael Feroli, chief U.S. economist at JPMorgan Chase in New York. “It’s soft, but it’s not collapsing.”

“Manufacturing is probably going to slow here” in the middle of the year, Feroli said.

The median forecast of 76 economists surveyed by Bloomberg News called for a 0.5 percent gain in durable-goods orders. Survey estimates ranged from a decline of 1.5 percent to an increase of 2 percent.

Meantime, housing is showing signs of stabilizing. Pending home sales provide insight into actual contract closings a month or two later. Purchases of existing homes, which made up about 93 percent of the housing market last year, are tabulated when the contract closes.

Wednesday’s figures suggest sales of existing homes will rebound after a drop in May. Purchases declined 1.5 percent last month to a 4.55 million annual rate, the Realtors group said June 21.

Existing-home sales have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, sales reached a peak of 7.25 million in September 2005.

Compared with a year earlier, May pending sales of previously owned properties climbed 15.3 percent after a 14.7 percent April gain.

Contract signings climbed in all four regions, including a 14.5 percent jump in the West and a 6.3 percent increase the Midwest.

“This beleaguered sector is finally on the mend,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said in an e-mail to clients. “On the surface, it points to a decent pop in existing home sales activity in June.”

Low borrowing costs continue to attract buyers. The average rate on a 30-year fixed mortgage dropped last week to 3.66 percent, the lowest since Freddie Mac began keeping records in 1972.

Builders like Lennar Corp. are seeing improvement. The third-largest homebuilder by revenue said today it received orders for 4,481 homes in the three months through May from 3,204 a year earlier. The Miami-based builder’s backlog jumped 61 percent.

“The ‘for sale’ housing market has, in fact, bottomed,” Chief Executive Officer Stuart Miller said in a statement. “We have commenced a slow and steady recovery process.”

This image is copyrighted.