Pending sales hit highest level in 19 months
Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3% to 100.1 in November from an upwardly revised 93.3 in October and is 5.9% above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4% monthly gain.
The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.
“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.
Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.
The PHSI in the Northeast rose 8.1% to 77.1 in November but is 0.3% below November 2010. In the Midwest the index increased 3.3% to 91.6 in November and is 9.5% above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7% above November 2010. In the West the index surged 14.9% to 121.2 in November and is 2.9% higher than a year ago.
Sears Holdings to close 100-plus stores
Hoffman Estates, Ill.-based Sears Holdings plans to close 100 to 120 Kmart and Sears full-line stores after reporting a disappointing recent performance. The Tuesday morning announcement — contained in a press release titled "Sears Holdings Provides Update" — reported a 5.2% comp-store sales decline for the quarter-to-date period, and a 2.6% decline in the year-to-date period, ended Dec. 25.
At Sears Domestic, slow moving consumer electronics and home appliances were leading causes of declines. At Kmart, consumer electronics and apparel were slow. Big-ticket items continue to perform poorly.
It remains unclear which stores will be closed; the company said it will post a list when the final determination is made.
Closing stores is one of several actions the company said it is putting in place. The moves are designed to "reduce on-going expenses, adjust our asset base and accelerate the transformation of our business model," said CEO Lou D’Ambrosio.
"These actions will better enable us to focus our investments on serving our customers and members through integrated retail — at the store, online and in the home," he added.
Excluding the effect of store closures, Sears expects to reduce 2012 peak domestic inventory by $300 million from the 2011 level of $10.2 billion at the end of the third quarter as a result of cost decreases in apparel, tighter buys and a lower inventory position at the beginning of the fiscal year.
It also intends to focus on improving gross profit dollars through better inventory management and more targeted pricing and promotion.
The company also intends to reduce fixed costs by $100 to $200 million.
According to the company, the store closing move reflects a change in strategy. "While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment," the announcement read.
The company’s 2011 performance will cause a fourth-quarter asset write-down of $1.6 billion to $1.8 billion.
Virginia looks at new regs on fireplaces
An advisory group to the ANSI Board of Standards has recommended that gas fireplaces or heaters with glass fronts contain a barrier to protect children or other at-risk individuals.
The CSA – America Vented Heater Technical Advisory Group met in Cleveland on Dec. 13 and approved the language for a revised standard, which now goes to ANSI committees for review.
If ultimately approved, a gas fireplace or gas heater must include a certified barrier if the temperature of the glass front can exceed 172 degrees F. The Hearth, Patio & Barbecue Association (HPBA) supports this revision and is committed to educating homeowners on safety precautions when using their fireplaces and other home heating products.
“Safety is our first priority, and we want people to enjoy the warmth and ambiance of their fireplaces and stoves, but be reminded that they can get hot,” said Jack Goldman, president and CEO of HPBA. “Children are by nature curious and need to be protected from hot surfaces.”
In 2007, HPBA developed an internationally recognized warning symbol for manufacturers and retailers of gas fireplaces and gas heaters to inform homeowners that glass fronts can become extremely hot due to their high efficiency, and precautions should be taken.