October Home Sales Rose 12 Percent

October home sales, tabulated when a contract closes, rose 12 percent from the same month last year before adjusting for seasonal variations. Total home sales in 2010 were 4.9 million, compared with a peak of 7.07 million in 2005 during the boom. The number of previously owned homes on the market dropped to 3.33 million last month, the fewest since January 2010. At the current pace, it would take 8 months to sell those houses, down from 8.3 months at the end of September. A range of seven months to eight months supply is consistent with stable home prices. Distressed home sales, comprised of foreclosures and short sales in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 28 percent of the total in October. Home sales increased even as 33 percent of the group’s members reported having problems with contracts or cancelations in October, jumping from 18 percent the prior month. The surge last month was not easily explained, citing changes to conforming loan limits in September and consistent frustration over the loan-approval process. Existing single-family home sales increased 1.6 percent to an annual rate of 4.38 million.

Lower Level Of Unemployment Claims

About 388,000 people filed for initial unemployment benefits in the week ended November 12, according to the Labor Department. It marked the lowest level since April 2 and a drop from the revised 393,000 claims in the prior week. Initial claims measure the number of first-time applications for unemployment benefits. Even though not all those claims end up being approved by the government, they’re considered a good measure of the job market’s strength. Lower claims, now for three weeks in a row, are considered an encouraging sign that layoffs could be slowing and more robust job growth could be in the pipeline. Companies are hearing and reading about gloom, but seeing decent sales, so layoffs are falling. Amid the Great Recession, weekly initial claims had risen as high as 659,000 in March 2009. As the job market started to improve, they eventually retreated to as low as 375,000 in February this year. But then the economy was hit by several shocks, including the earthquake in Japan and rapidly rising prices for raw materials like oil. The jobs recovery slowed in the meantime, but now that the effects of those temporary shocks are fading, various readings on the economy, including initial claims, are improving once again. Economists often look for claims to drop below 400,000 each week, to signal that job growth is strong enough to bring the unemployment rate down. That said, the figure tends to be a choppy, so economists also look at a four-week moving average to smooth out volatility. At 396,750 last week, the four-week moving average is now also hovering at its lowest level since April, another sign of improvement. Click To See More Unemployment Info

Homeowners Can Expect To Pay More For Home Insurance

As FBD Insurance announced yesterday, homeowners can expect to pay more for a home insurance, as the insurance companies counted the cost of last month’s flooding. The news of higher premiums partially obscured a strong trading statement from the company, whose share price surged after it increased its guidance and announced volumes were up for the first time since 2008. In an interim management statement for the third quarter, the FBD mentioned the flooding cost the industry in the region of €125 million and premium rates of homeowners insuranceare likely to increase as a result. FBD Insurance itself took a hit of about €6 million.

U.S. Economic Activity Continued To Expand

U.S. economic activity continued to expand in October; index of leading economic indicators rose 0.9% last month, significantly faster than the revised 0.1% rise in September and the 0.3% increase in August. The economy, after growing at an anemic pace of just 0.9% in the first six months of the year, grew at a 2.5% rate in the July-September quarter. Some analysts are looking for even stronger growth in the current October-December quarter. But even the most optimistic forecasters are not predicting growth will rebound to levels that would make a significant dent in the unemployment rate, which has been stuck around 9% for the past two years. The October rebound in the leading index reflected positive contributions from building permits, the spread between short-term and long-term interest rates, a rising stock market and a slightly better employment reading. Economists said the strong October gain in the leading index and other positive reports recently had at least eased fears that the economy would be in danger of slipping into a recession.

Periodic Tests To Ensure A Stable Of U.S. Economy

Federal Reserve announced that a central bank will conduct a fourth round of stress tests in the coming weeks to determine if U.S. banks can withstand a recession. These tests are necessary to ensure a stable of U.S. economy. Federal Reserve also mentioned an increased downside risks that Europe’s debt crisis poses to financial markets and the global economy. Federal Reserve are monitoring European developments very closely, and will continue to do all that can to mitigate the consequence of any adverse developments abroad on the U.S. financial system. The central bank announced the stress tests are a key part in its ongoing efforts to make sure that banks, and the entire financial system, are stable. Banks that don’t pass the stress tests are asked to take steps to raise new capital in case of big losses. The Fed also oversees Wall Street’s biggest banks, including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo. The Fed has performed periodic stress tests on the 19 banks it watches since 2009.

Gold Prices Will Continue To Rise Next Week

As investors expected, gold prices will probably continue to rise next week. In the Kitco News Gold Survey, out of 34 participants, 22 responded this week. Of those 22 participants, 18 see prices up, while two see prices down and two see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts. Gold prices should continue to move higher because of the turmoil in Europe is so entrenched. If the European Central Bank has to expand its balance sheet to shore up ailing European economies, gold is likely to hit new records into 2012. Gold prices rallied sharply on Friday, supported by the dollar weakening and the stock market rallying. Market participants are keeping an eye on Europe after the Greek prime minister stepped down and Italy’s prime minister is planning to leave. Analysts at Brown Brothers Harriman said the political uncertainty appears to be easing gradually, with a technocratic government, that is a government run by people based upon how knowledgeable and skillful they are in their chosen field, slated to take over in Greece. Italy could see the same type of government in place next week following votes on austerity packages. Gold fell earlier in the week, that may have been related more to the problems regarding customer funds at now-bankrupt firm MF Global than to the near-term desirability of gold. Customer accounts have been moved to other clearing firms, but not all positions or monies have accompanied the move and that might have caused accounts that do not have sufficient margin to sell other assets to top off the accounts. Market watchers announced that seems to be the case in other markets besides precious metals, too, as prices for some commodities seem to be lower than fundamentally justified in the short-term. Click To See More Gold Info

Stocks Turned Higher After Italy Approved An Economic Reform Bill

Stocks turned higher after Italy approved an economic reform bill. After Italy’s Senate passed the bill, world markets turned higher, the euro edged up and oil rose above $98 a barrel. Two-year Italian government borrowing costs dropped below 6 percent after topping 7 percent earlier in the week. The legislation still has to clear Italy’s lower house. In Greece, a former central banker was sworn in as interim prime minister. Lucas Papademos took over a coalition government after a two-week political crisis that jeopardized the country’s ability to continue receiving emergency loans. Walt Disney Co. jumped 7 percent in early trading, the biggest gain in the S&P 500. The company reported record annual profits and revenues after the market closed Thursday, thanks to stronger advertising sales at ESPN and the Disney Channel. The S&P 500 rose 25, or 2.2 percent, to 1,264. Both the S&P 500 and the Dow are now on track for weekly gains. For the week, the S&P is up 0.9 percent, the Dow 1.5 percent. The Nasdaq composite rose 48, or 1.8 percent, to 2,673. U.S. bond markets were closed for Veterans Day. Markets were pummeled Wednesday when Italy’s borrowing costs spiked and talks to name a new Greek prime minister broke down. Click To See More Stocks Info