- Published on Thursday, 25 October 2012 17:58
- Written by Bloomberg News
AMERICANS
bought new homes in September at the fastest pace in two years, another
sign the industry whose decline was at the heart of the recession is
bouncing back.
Sales climbed 5.7
percent to a 389,000 annual pace, the most since April 2010, following a
revised 368,000 rate in August, figures from the Commerce Department
showed today in Washington. The median estimate of 75 economists
surveyed by Bloomberg called for an increase to 385,000.
Population growth and
mortgage rates pushed to record lows by Federal Reserve purchases of
housing debt are generating sales for builders like Toll Brothers Inc.
and spurring the three-year economic recovery. Housing starts in
September jumped 15 percent to the fastest pace since July 2008, a
report last week showed.
“All the things that
were really holding back housing are finally starting to lift,” said Guy
Berger, a US economist at RBS Securities Inc. in Stamford, Connecticut,
who projected sales would climb to 390,000. “It really is tough to find
any bad signs here. Inventories are very, very lean. Assuming the
economy remains on track, housing should continue to improve for the
rest of the year and into 2013.”
Stocks fell, erasing
earlier gains, after the Fed said employment growth is slow and strains
in financial markets continue to pose risks to the economy. The Standard
& Poor’s 500 Index dropped 0.3 percent to 1,408.75 at the close in
New York. Treasury securities declined, sending the yield on the
benchmark 10-year note up to 1.79 percent from 1.76 percent late on
Wednesday.
A preliminary report
showed a Chinese purchasing managers’ index climbed this month, boosting
confidence that the world’s second-biggest economy is stabilizing. The
49.1 reading for October was up from 47.9 the prior month and just shy
of the 50 level that is the dividing line between contraction and
growth, according to data from HSBC Holdings Plc. and Markit Economics.
The news on Thursday
wasn’t as positive elsewhere as euro-area services and manufacturing
output contracted more than economists forecast in October and German
business confidence dropped to the lowest in more than two and a half
years as Europe’s recession deepened.
The Bloomberg survey
estimates for US new-home sales ranged from 370,000 to 410,000. The
August reading was previously reported as a 373,000 annual rate.
A government tax credit helped boost sales in April 2010, the last time they were this strong.
Fed policy-makers on
Thursday said the economy is still growing modestly and unemployment
remains elevated as they maintained $40 billion in monthly purchases of
mortgage-backed securities aimed at spurring the three-year expansion.
“Growth in employment
has been slow,” the Federal Open Market Committee said on Thursday at
the conclusion of a two-day meeting in Washington. “Household spending
has advanced a bit more quickly.”
Demand for new houses
was up 27.1 percent from a year ago, today’s report showed. The median
price for a new house climbed 11.7 percent in September from the same
month last year to $242,400.
Purchases increased in
three of four regions last month, led by a 16.8- percent gain in the
South and a 16.7- percent increase in the Northeast. Sales in the
Midwest dropped 37.3 percent, the biggest decrease since January 1994.
A jump in housing
starts in September was the latest sign the new-home industry is showing
signs of vitality. Beginning construction rose last month to an 872,000
annual rate, the fastest pace since July 2008 and exceeding all
forecasts in a Bloomberg survey, Commerce Department figures showed on
October 17.
Supporting future
construction, the supply of homes at the current sales rate dropped to
4.5 months, the lowest since October 2005, from 4.7 months in August,
Thursday’s report showed. There were 145,000 new houses on the market at
the end of September.
Residential
construction hasn’t contributed to economic growth over the course of an
entire year since 2005, when it accounted for 0.4 percentage point of
the 3.1 percent increase in gross domestic product. From 2006 through
2009, the homebuilding slump subtracted 0.8 percent point from growth on
average. The declines diminished over the past two years.
(Bloomberg News)
In Photo: Demand for new houses was up 27.1 percent from a year ago, today’s Commerce Department report showed. (Bloomberg)
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