Bloomberg reported that purchases of new houses in the US fell more than forecast in January, reflecting declines in the West and South that indicate a California tax credit and bad weather may have played a role.
Figures from the Commerce Department showed that sales declined by 13% to a 284,000 annual pace. The median estimate of economists surveyed by Bloomberg News projected a decrease to a 305,000 rate. Demand dropped 37% in the West and 13% in the South.
Foreclosures will keep depressing prices, making distressed, previously owned properties more attractive to prospective buyers than new houses. Combined with unemployment at 9% and tight credit standards, home construction may keep lagging behind the rest of the economy this year.
Mr Jonathan Basile, a senior economist at Credit Suisse in New York, said that "This is still a very weak demand picture. There has been no recovery in housing starts, permits or new home sales. We're in a period where demand and supply will run well below average."
The median estimate of 70 economists surveyed by Bloomberg News called for a decline to 305,000. Estimates ranged from 275,000 to 340,000. The Commerce Department revised December purchases down to 325,000 from a previously reported 329,000 rate, still the strongest pace since April 2010.
Other reports showed consumer confidence climbed last week to the highest level since April 2008, fewer Americans than forecast filed claims for unemployment insurance last week, and orders for durable goods climbed in January as demand for aircraft rebounded after plunging the prior month.
The Bloomberg Consumer Comfort Index, formerly the ABC News US Weekly Consumer Comfort Index, was minus 39.2 in the period to February 20th 2011 as compared with minus 43.4 the prior week. 49% of those polled held positive views on their financial situation, the most in a year.
According to figures from the Labor Department, applications for jobless benefits decreased by 22,000 to 391,000 in the week ended February 19th 2011. Claims have fallen in three of the past four weeks, pushing down the monthly average to the lowest level since July 2008.
Bookings for goods meant to last at least three years rose 2.7% after a 0.4% drop in December that was smaller than previously estimated, according to data from the Commerce Department. Orders excluding transportation equipment unexpectedly dropped, reflecting a pattern of declines in capital goods in the first month of a quarter that’s been evident for the past three years.
The slump in new home sales in the West followed a 63% surge in December. Buyers in California could qualify for a tax incentive worth as much as USD 10,000 if they signed a contract between May 1st 2011 and the end of 2010. Sales of new houses are based on contract signings rather than closings.
According to the National Climatic Data Center, snow covered about 70% of the country in the middle of January 2011. That may have also prevented buyers in the South from venturing out to new developments. Purchases climbed 55% in the Northeast and 17% in the Midwest.
The median sales price rose 5.7% in January from the same month in 2010, to USD 230,600. The increase in values probably reflects the change in the mix of sales toward the West where prices are generally higher.
The supply of homes at the current sales rate rose to 7.9 month's worth from 7 months in December. There were 188,000 new houses on the market at the end of January, the fewest since December 1967. Previously owned home purchases unexpectedly rose 2.7% to a 5.36 million annual rate in January as investors used all cash offers to snap up distressed properties. Existing house purchases are calculated when a contract closes.
(Sourced from www.bloomberg.net)
