The data focus this coming week (May 21-25) will be on home sales. A rise in initial contract signings for pre-owned homes in February/March points to an increase in closings in April. But much will depend on successful mortgage applications and all-cash investor sales of distressed properties.
Meanwhile, an increase in permits for new home construction in April suggests that builders observed an uptick in new home sales that month. We have penciled in a 2% increase to 335,000 units. Otherwise, durable goods orders for April are expected to sag under the weight of weak aircraft, turbine machinery, and defense orders.
Consumer sentiment in late-May should be reinforced by falling gasoline prices despite stock market setbacks and some negative job market news. This week also brings the G8 summit hosted by President Obama, followed by a gathering of EU leaders in Brussels that is expected to focus on proposals to stimulate growth.
Remarks from Greek politicians will be scrutinized by markets. Fed speeches will be listened to for indications about how the Fed might react to a worsening Eurozone situation.
Tuesday, May 22 ? Existing Home Sales (Apr.) The Pending Home Sales Index moved up in February and March, pointing to a small increase in home sales in April. Our call is that April home sales rose 2.7% to a 4.60 million rate.
Wednesday, May 23 ? New Home Sales (Apr.) Single-family housing permits, a leading indicator for new home sales, were up 1.9% in April. Based on this, we project that new home sales increased 2% in April to a 335,000 annual rate.
Thursday, May 24? Durable Goods Orders (Apr ) Durable goods orders should fall another 1.0% in April since Boeing took orders for only four aircraft in April (albeit 787s) and turbine machinery orders suffer their first-month-of-the-quarter swoon.
Most of capital goods should have a decent month as a number of machinery categories which sank in March bounce back in April?oilfield equipment orders plunged to one-third below their six month average to their leanest level since 2006, and that suggests March was an anomaly.
Defense orders could also be a drag, however, as March was well above six-month average although close to the 12-month average.
Friday, May 25 ? Reuters/University of Michigan Consumer Sentiment Index (May, Final) Consumer sentiment will close out the month slightly higher than the mid-month reading. Falling pump prices are a positive that should outweigh recent equity market declines and negative job market news.
