Existing-home sales continue rise
July saw the highest level of existing-home sales for the entire year of 2014 so far, reaching a seasonally adjusted annual rate of 5.15 million, according to the National Association of Realtors.
This is up 2.4% from June’s downwardly revised rate of 5.03 million. However, sales are still 4.3% below last July’s 5.38 million-unit level (also that year’s peak).
In terms of single-family homes, sales were up 2.7% on a monthly basis to a seasonally adjusted annual rate of 4.55 million. This is still 4.2% below last year’s pace.
The NAR pointed to a significant decline in distressed sales and a strengthening economy, riding on the back of job growth and improving inventory. However, affordability may take a hit in the near future, as median family incomes are not rising as quickly as prices.
“The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market,” said NAR chief economist Lawrence Yun. “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise.”
The median existing-home price was up 4.9% year-over-year to $222,900; for single-family homes, that number was $223,900 (up 5.1%).
Total housing inventory was up 3.5% to 2.37 million existing homes for sale, representing a 5.5-month supply.
Distressed homes were finally below the double-digit mark, accounting for 9% of July sales (compared to 15% last year).
“To put it in perspective, distressed sales represented an average of 36% of sales during all of 2009,” said Yun. “Fast-forward to today and rising home values are helping owners recover equity and strong job creation are assisting those who may have fallen behind on their mortgage due to unemployment or underemployment.”
In Q3, Toro on track for Destination 2014 goals
The Toro Company declared that it was well on its way to meeting its previously stated 2014 goals upon the release of its third-quarter earnings report Thursday.
Sales for the quarter were up 11.3% year-over-year to what Toro referred to as a "record $567.5 million," riding a wave of strong retail demand across its various segments.
Net earnings of $50.0 million were also up in comparison to last year’s $40.1 million.
“Our team is especially proud to deliver record results and double-digit sales and earnings growth for the third quarter, in which we also celebrated our Centennial milestone,” said Michael Hoffman, Toro’s chairman and CEO. “After successfully managing through the challenges of a late spring, our quarterly results benefited from favorable summer growing conditions in key markets that, similar to last year, helped drive retail sales across most of our businesses."
Hoffman pointed to an increase in golf equipment and irrigation products shipments, as well as a return to a more normal pace for channel purchases of professional equipment subject to Tier 4 emission standards.
He also cited a promising snow pre-season and gains in productivity in predicting a solid finish to the company’s fiscal year.
As such, Toro is changing its full-year outlook to a 6% revenue growth and net earnings per share of about $2.94 to $2.96.
Sears CFO describes decision points
Among the decisions facing Sears Holdings is what to do with its 51% stake of Sears Canada.
Rob Schriesheim, Sears Holdings’ chief financial officer, addressed that question and others as part of the company’s second-quarter earnings report.
"BofA Merrill Lynch continues to assist us in exploring strategic alternatives for our 51% interest in Sears Canada, including a potential sale of our interest or Sears Canada as a whole," Schriesheim said. "Our interest in Sears Canada has a current market value of approximately $765 million as of Aug. 19, 2014."
Closing stores also factored heavily in his remarks.
"We also continue to reduce unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent," he said. "We have already announced the closure of approximately 130 underperforming stores in fiscal 2014 and may close additional stores during the remainder of the year."
Also up in the air is the fate of the Sears Auto Center business. "We have had discussions with third parties regarding a variety of opportunities, including partnerships," Schriesheim said. "In addition, over the next six to 12 months, we intend to work with our lenders and others to evaluate our capital structure with a goal of achieving more long-term flexibility, and may take other actions as appropriate."
During the first half of the year, Sears generated about $665 million in liquidity, including the $500 million dividend it received from the separation of Lands’ End.