Housing recovery may lose steam after government tax credit expires
(WASHINGTON) Sales of new US homes unexpectedly fell in September, a sign the housing recovery may lose momentum after a government tax credit expires.
Sales decreased 3.6 per cent to a 402,000 annual pace, lower than the median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed yesterday in Washington. The median price of a new home dropped 9.1 per cent from September 2008.
Meanwhile, a measure to extend the soon-to-expire US$8,000 tax credit for first time homebuyers enjoys widespread support in the US Senate, the chamber's top Democrat and top Republican both said on yesterday.
'There has been general agreement by a significant number of senators, Democrats and Republicans, to get this done,' Senate majority leader Harry Reid said in remarks on the Senate floor. The chamber's top Republican, Senator Mitch McConnell, also said that most senators support the measure.
New-home sales were forecast to rise to a 440,000 annual rate, according to the median forecast of 75 economists in the Bloomberg survey.
Estimates ranged from 412,000 to 460,000 after an initially reported 429,000 rate in July. Last month's pace was the lowest since June.
Meanwhile, new orders for long-lasting US manufactured goods rose one per cent in September, Commerce Department data showed yesterday, suggesting that the economy's wobbling recovery from recession may be steadying.
The increase met expectations of analysts polled by Reuters and was the second increase in the last three months. It followed an unrevised 2.6 per cent decline in August.
Compared with a year ago, orders were down 24.1 per cent.
'In a recovering economy, you'll get three steps forward and then two steps back. That's what you're seeing here,' said David Katz, chief investment officer at Matrix Asset Advisors in New York. 'This data point is positive.'
Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure of overall business health.
Non-defence capital goods excluding aircraft, a closely watched proxy for business spending, beat expectations and rose 2 per cent in September after falling 0.8 per cent the month before. Analysts had anticipated they would increase 0.9 per cent.
Shipments of durable goods rose 0.8 per cent in September and have been up for three of the last four months, while inventories fell for the ninth month in a row, by one per cent. -- Bloomberg, Reuters
Source: Business Times, 29 Oct 2009