Bill Losey’s Weekly Economic Update for Jan. 24, 2010

TIME FOR OPTIMISM IN THE HOUSING MARKET?
Existing home sales have improved in five of the past six months. In December, they rose 12.3%. While December’s sales pace was still 2.9% below year-ago levels, the National Association of Realtors also noted that the glut of unsold homes had been reduced to 8.1 months of supply compared to 9.5 months’ worth in November. The median existing home sale price fell 1.0% last month to $168,800.

LEI INDEX SHOWS MORE IMPROVMENT
The Conference Board’s Leading Economic Indicators index rose 1.0% in December. Pair that with its 1.1% ascent in November and you have the two best months since it rose 1.4% in March. The building permits indicator showed the most improvement.

HOUSING STARTS DOWN, PERMITS WAY UP
Government data seems to affirm one of the findings of the Conference Board index. The Census Bureau just reported a 16.7% increase in building permits in December (the best month in that category since March). Yet housing starts were down 4.3% in December, hitting a 14-month low.

GOLD & OIL TURN LOWER
Optimism about the global economy seems to have increased appetites for risk, and last week you also had the fear that China might hike interest rates. So gold lost 1.43% for the week to settle Friday at $1,341.00 an ounce. Oil prices plunged 3.74% on the week to end up at $89.11 a barrel Friday.

DOW ADVANCES AGAIN
The DJIA posted its eighth straight weekly gain, rising 0.72% across four market days to settle at 11,871.84 Friday. The S&P 500 (-0.76% to 1,283.35) and the NASDAQ (-2.39% to 2,689.54) saw weekly retreats.