Jan 7, 2010
US pending home sales index down 16% in November
WASHINGTON: Pending sales of previously-owned US homes fell more sharply than expected in November, but a surge in new factory orders offered assurance the economic recovery remained on track.
In a further boost to the economy, initial results from automakers on Tuesday showed December vehicle sales were on track to be the strongest since the summer’s “cash for clunkers” trade-in incentive programme.
“It goes along with what we’ve been seeing, a slight improvement in the economy overall and it’s gaining some breadth ... particularly on the manufacturing level,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.
The National Association of Realtors’ Pending Home Sales Index, based on contracts signed in November, dropped 16% from October to 96.0 after rising for nine straight months.
Analysts, who had looked for a decline of only 2%, blamed the drop on the end of a rush to beat the original expiration of a popular tax credit. They said the fact the index was up 15.5% from its year-ago level indicated the housing market continued to heal.
A separate report from the Commerce Department showed new orders at US factories rose 1.1% in November. It was their third straight monthly increase and financial markets had expected a 0.5% gain.
The data came a day after a report showed factory activity in December rose to its highest level since April 2006.
The slump in pending home sales, which lead actual sales by a month or two, rekindled concerns the housing market could falter once government support is withdrawn.
The bullish factory orders data partially offset the weak housing report, hoisting the benchmark Standard & Poor’s 500 Index to a 15-month closing high.
Prices for US government debt rose for a second day, while the US dollar suffered its biggest one-day fall against the yen in a month.
Home sales have been boosted by an US$8,000 tax credit for first-time home buyers. The popular tax credit, which was originally scheduled to expire at the end of November, has been expanded and extended to mid-2010. — Reuters
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