Recession may be easing

WASHINGTON — Evidence that housing is poised to improve raised hopes Monday that the recession is easing.

Construction spending and pending home sales both fared better than expected in March, and private economists saw the reports as further evidence that the overall economy is stabilizing after its bleakest stretch in a half-century. If so, the economy might be able to mount a recovery soon.

The Commerce Department reported that construction spending rose 0.3 percent in March. It was the first increase after five months of declines.


Good news
Meanwhile, the National Association of Realtors said its index of pending home sales rose 3.2 percent to 84.6 in March. That was the second monthly increase after the index hit a record low in January. The pending sales index is now 1.1 percent above last year’s levels.

Typically, there’s a one- to two-month lag between a contract being signed and a final deal being sealed. So the index is a good barometer for future home sales.

Economists saw both reports as good news.

Some analysts cautioned that the economy still faces threats from waves of layoffs and rising mortgage defaults, which are causing more banks to tighten lending standards.

The construction report showed that spending on private residential projects fell 4.2 percent in March. It was the latest in a series of declines that began three years ago, when the housing bubble burst with disastrous effects for the home industry and the overall economy.

Nonresidential construction rose 2.7 percent in March, the biggest advance in nine months and the second straight increase.

Government building activity also showed strength in March, rising 1.1 percent. A 1.3 percent gain in state and local activity offset a 1.7 percent drop in spending on federal projects.

Some analysts fear that the commercial real estate market could topple into the worst crisis since the last great property bust of the early 1990s. Economists are more hopeful, though, that the three-year slide in housing could be nearing a bottom, although they do not expect prices to stop falling until early next year.


by the associated press