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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1410)	3/2/1999 9:22:00 PM
From: porcupine --''''>	Respond to of 1722

U.S. Home-Sales Dip But Forecast Gauge Up By Glenn Somerville WASHINGTON (Reuters) - Winter weather took a heavier toll on U.S. new-home sales than expected in January, the government said Tuesday, while a separate measure showed the broader economy still packing a punch. The Commerce Department said sales of new homes dropped 5 percent to a seasonally adjusted annual rate of 918,000 -- well below the 975,000-unit rate that Wall Street economists had forecast -- after a 3.6 percent decline in December. Mortgage rates have edged up recently, possibly damping some sales, but analysts said a steep slump in Midwest sales showed that winter also likely played a role in trimming January sales. Separately, the private-sector Conference Board said its Index of Leading Economic Indicators, a measure of future economic activity, rose 0.5 percent in January after a 0.2 percent gain in December, underlining the durability of the economic expansion. That followed a revised 0.2 percent increase in December that was previously reported as up 0.3 percent. ''The leading indicators show the overall economy still possesses very good momentum,'' said Lynn Reaser, chief economist for Bank of America Private Bank in Jacksonville, Fla. She noted that even its measures of manufacturing activity picked up at the start of 1999, indicating that some of the drag from fading exports to Asia might be lessening. ''The woes in Brazil will restrain the manufacturing improvement going forward, but basically we may be seeing that the worst is over in manufacturing and the best is past in the housing market,'' Reaser said. Analysts said the reports showed the U.S. economy, which will complete eight years of unbroken growth this month since the last recession in 1990-91, remained solidly on track for continued expansion. Even with back-to-back monthly declines in December and January, new-home sales in January remained 8.3 percent above the pace of a year earlier, when new homes were moving at a rate of 848,000 a year. Financial markets showed little direct response to the latest economic data, though share prices were up strongly on the New York Stock Exchange by early afternoon. Bond prices also rallied. New-home sales hit a record million-a-month level last November. Some cooling from that blistering pace might be welcomed by financial markets worried that the Federal Reserve might feel interest-rate rises were necessary to keep a lid on potential inflation pressures. ''If the Fed sees some signs that the economy is not racing forward, it may cause them to hold off (on rate rises),'' Reaser said. Regionally, new-home sales fell everywhere except in the West where they rose 8 percent during January to 271,000 a year. In the Midwest, sales plunged 24.9 percent to an annual rate of 133,000 -- the sharpest decline for the region in more than two years. Sales in the Northeast were down 7.2 percent during January to an annual rate of 77,000 and in the South they declined 3.7 percent to 437,000. The Conference Board said its report pointed to continued economic growth at least through mid-1999 and added that signs of any imbalances that could jeopardize economic growth ''remain relatively subdued.'' Economist Ken Mayland of KeyCorp in Cleveland agreed that there were ''lots of demands in the pipeline'' indicated by the monthly gauge that implied continued growth. ''It's going to be hard for American businesses not to have another good year in 1999,'' he added.