A counterpoint:
U.S. Jan. New Home Sales Plunge 14.8% to 823,000 Rate
from Bloomberg
Washington, Feb. 27 (Bloomberg) -- U.S. new home sales fell more than expected in January to the lowest level in 1 1/2 years, suggesting housing will be hard-pressed to repeat last year's record performance.
Sales of new single-family homes slumped 14.8 percent last month to 823,000 units at an annual rate from a revised pace of 966,000 houses in December, the Commerce Department said. It was the slowest since June 2000 and compared with analysts' forecasts for a 940,000-unit a year sales pace.
A record 906,000 new homes were sold last year as mortgage rates declined and lured buyers. While 30-year fixed mortgage rates are close to the lowest in the three decades that Freddie Mac has kept records, home sales are likely to cool amid rising unemployment. That helps explain why the economic recovery may be more moderate than recoveries from past recessions.
``We are looking for new home sales to weaken modestly in 2002, which is the exact opposite of what you see in an economic recovery,'' said Mark Vitner, an economist at Wachovia Securities Inc. in Charlotte.
The decline in new home sales helps explain why Federal Reserve policy makers say the U.S. will recover more slowly than after past recessions. The consensus of the 17 members of the Fed's policy making Open Market Committee is that the economy should grow 2.5 percent to 3 percent during 2002.
``Increasing signs have emerged that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm,'' Fed Chairman Alan Greenspan said in the text of testimony to the House Financial Services Committee.
`Moderate the Speed'
``An array of influences unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery.''
December sales were revised from a previously reported 946,000-unit rate. Home sales help the economy by stimulating demand for building supplies, appliances and home furnishings.
The statistics follow by two days a report by the National Association of Realtors showing that sales of previously owned homes surged last month to a record 6.04 million units at an annual rate.
New home sales are considered a more current gauge of the housing market because they are based on contracts, while existing home sales are based on closings and reflect buying decisions that occurred at least a month earlier.
By Region
By region, sales fell 22.1 percent in the South to an annual pace of 353,000 last month, 17 percent in the West to an annual rate of 235,000 and 0.6 percent in the Midwest to an annual rate of 162,000. Sales rose 8.9 percent in the Northeast to 73,000 homes at an annual rate.
The median price of new homes rose 5.7 percent in January to $183,400 from $173,500 the previous month. Prices are up 7.1 percent from the same month last year.
The inventory of new homes for sale rose to a 4.6 month- supply in January, the highest since June 2000, from 3.8 months in December. The number of homes available for sale rose to 313,000 last month from 308,000.
Some builders say they expect sales to stay strong in coming months because of low mortgage rates. The rate on a 30-year mortgage averaged 7 percent in January, down from an average of 7.07 percent the previous month, according to Freddie Mac, the No. 2 buyer of U.S. mortgages.
Builders Optimistic
Mortgage rates have fallen more since then, with the average rate on a 30-year mortgage dropping to 6.81 percent last week. A drop in rates helps explain why Pulte Corp., the largest U.S. homebuilder, in January said its 2002 earnings would exceed expectations because demand is holding up. The builder now expects to earn $6.75 a share to $7.00 a share, more than the $6.28 expected by analysts in a Thomson Financial/First Call survey.
Some builders say that new home sales are also booming. ``You've got tremendous demand building'' because of ``low interest rates, the swelling of the population, and tax refunds,'' said Robert Toll, chairman and chief executive of Toll Brothers Inc., in an interview yesterday.
Toll Brothers, the largest U.S. builder of luxury homes, yesterday said that its 2002 profit would top expectations. Orders rose in January from the same month last year and are also up in February, Toll said.
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Best Regards, J.T. |
