US housing numbers
bloomberg.com.
Jan 28 (Bloomberg) -- Purchases of new homes in the U.S. fell to a 12-year low in December, capping the biggest annual decline on record.
Sales decreased 4.7 percent to an annual pace of 604,000, the fewest since February 1995, from a 634,000 rate the prior month, the Commerce Department said today in Washington. The median price last month dropped 10 percent from December 2006, the biggest 12-month decline in 37 years.
The report may reinforce concern that falling home values and stricter lending rules will lead to more foreclosures and hurt consumer spending. Federal Reserve policy makers, meeting later this week, will probably cut interest rates again to try to ward off recession, economists said.
``Today's numbers are a new blow to the idea of a housing- market recovery,' said Chris Rupkey, a senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who forecast a decline to 613,000. ``The broader economy is very, very close to falling over the edge. The Fed really needs to think aggressively on cutting rates as if we were in a recession.'
Stocks and bonds were lower after the report. The benchmark 10-year U.S. Treasury note fell, pushing the yield up 3 basis points to 3.58 percent as of 10:26 a.m. in New York.
Economists forecast new home sales would be unchanged from an originally reported 647,000 rate the prior month, according to the median estimate in a Bloomberg survey of 62 economists. Forecasts ranged from 595,000 to 680,000.
Median Price Falls
The median price of a new home fell to $219,200 in December from $244,700 a year earlier, today's report showed. For all of 2007, the median price rose 0.2 percent to $246,900.
For all of 2007, sales dropped 26 percent, the most since records began in 1963.
Even as builders reduced inventories, the drop failed to keep pace with the decline in sales, pushing up the month's supply. The number of homes for sale fell to a seasonally adjusted 495,000 in December, the fewest since October 2005. At the current sales pace, it would take 9.6 months to sell all those houses, the most in over two decades.
Purchases dropped in three of four regions, led by a 6.5 percent decline in the South. The Northeast was the only region that registered a gain.
Fed's Rate Cut
The Fed on Jan. 22 cut the benchmark interest rate by three-quarters of a percentage point, its first emergency reduction since 2001, after global stock markets tumbled on increasing signs of recession.
Policy makers said ``incoming information indicates a deepening of the housing contraction' and ``a weakening of the economic outlook,' in announcing the decision.
The government's economic stimulus plan last week also seeks to address the housing slump. The accord includes a provision allowing Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, to temporarily buy mortgages of as much as $729,750, exceeding the current $417,000 federal limit.
The Standard & Poor's index of 15 builders rose 24 percent last week, the biggest weekly gain since 1995, on expectations the measures will boost demand for housing.
Home Resales
Sales of previously-owned homes, which account for about 85 percent of the market, fell more than forecast in December, capping the biggest yearly slump in more than a generation, the National Association of Realtors said last week.
The median price of an existing single-family home dropped 1.8 percent in 2007, the first decline since records began four decades ago and probably the first since the Great Depression in the 1930's, the Realtors group said.
New-home purchases are considered a timelier indicator because they are based on contract signings, while existing home sales are calculated when a contract closes, usually a month or two later.
Purchases of new houses will fall another 15 percent this year, according to a forecast by the Mortgage Bankers Association. Sales of existing homes will drop 13 percent, the group said on Jan. 14.
Housing-related firms continue to struggle with the fallout from the subprime mortgage crisis. Wachovia Corp., the fourth- largest U.S. bank, last week said profit plunged 98 percent to its lowest since 2001 after writedowns for bad loans and mortgage-backed securities.
``These are extremely difficult times for all homebuilders,' Steven J. Hilton, chief executive officer of Meritage Homes Corp., said in a Jan. 17 statement. The homebuilder, whose biggest markets are Texas, Arizona and California, said fourth-quarter revenue from homes sold fell 25 percent as orders declined. |
