U.S. Existing Home Sales Rise on Record Price Slump
By Bob Willis
Jan. 26 (Bloomberg) -- Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged.
Purchases rose 6.5 percent to an annual rate of 4.74 million from 4.45 million in November that was less than previously estimated, the National Association of Realtors said today in Washington. The median price dropped 15 percent from a year ago, the biggest decline since records began in 1968 and probably the biggest in seven decades, according to the group.
“You have to put it in the context of an even steeper decline for the previous month,” said David Sloan, a senior economist at 4Cast Inc. in New York, who had the highest projection in the Bloomberg News survey. “The net trend is still negative. It does seem that some cheap prices are attracting buyers. I don’t think it’s a clear sign of a revival in the housing market. The housing market is very weak.”
The housing slump at the center of the global credit crisis and economic downturn is likely to persist well into 2009, hurting companies such as Home Depot Inc. President Barack Obama has pledged to stem foreclosures and boost job creation to break the longest recession in a quarter century.
The index of leading economic indicators unexpectedly increased in December as the money supply expanded, a report from the Conference Board, a New York-based research group, showed today. The 0.3 percent increase was the first gain in six months and masked signs of a worsening recession. The index points to the direction of the economy over the next three to six months.
Better Than Forecast
Resales were forecast to fall to a 4.4 million annual rate, according to the median estimate of 70 economists in a Bloomberg News survey. Estimates ranged from 4.2 million to 4.6 million.
Sales were down 3.5 percent compared with a year earlier. Resales averaged 4.91 million in 2008, down 13 percent from 2007 and the fewest in 11 years.
LEADING INDICATORS UP:
Up, but still low…
Boosted by swelling money supply related to government stimulus, the Conference Board's index of leading economic indicators showed its first gain since June, up 0.3 percent in December. But without money supply, indications are in fact very negative with the report warning that the results point to "intense recession" through the spring. Factors pointing to economic decline include falling building permits, a falling factory workweek, faster vendor deliveries and rising unemployment claims. The report's coincident indicator is showing the degree of current trouble, with a 0.5 percent decline following a 0.3 percent decline in November.
Market Consensus Before Announcement
The Conference Board's index of leading indicators fell 0.4 percent in November, following a 0.9 percent drop the month before. The latest decrease was led by declines in building permits, stock prices, and a rise in unemployment claims. The index of coincident indicators, resumed its downward trend with a 0.3 percent decline after a 0.3 percent technical rebound in October. Industrial production had boosted this index in October on a rebound in activity in areas hit by hurricanes. But overall, the report pointed to a deeper recession with no sign of recovery yet in sight.