Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: housing | home | growth | sales

Housing Poised to Bolster US Growth as Sales Surge

Thursday, 20 December 2012 02:34 PM EST

Sales of previously owned homes climbed to a three-year high in November, reinforcing forecasts that the industry is set to contribute to U.S. annual economic growth for the first time since 2005.

Purchases of existing houses increased 5.9 percent to a 5.04 million annual rate, the most since November 2009, the National Association of Realtors reported in Washington. The median forecast of 82 economists surveyed by Bloomberg projected a 4.9 million rate.

“Housing is going from being a powerful headwind to the economy to what will be a powerful tailwind,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It turned around in 2012, and I think it’s going to take off in 2013.”

Rising real-estate values are helping to lift consumer confidence, which rose to an eight-month high last week, according to the Bloomberg Consumer Comfort Index. Another report showed the economic outlook weakened in November, highlighting the risks posed by potential federal spending cuts and tax increases, after growth picked up more than initially reported in the third quarter.

Stocks were little changed after the reports as investors remained focused on budget negotiations. The Standard & Poor’s 500 Index was at 1,437,81 at 1 p.m. in New York.

In Europe today, U.K. retail sales unexpectedly stagnated in November as spending at department stores slumped the most in almost two years. Sales including fuel were unchanged from October, when they fell 0.7 percent, the Office for National Statistics said in London.

Bank of Japan

Elsewhere, the Bank of Japan expanded its asset-purchase program for the third time in four months and will reconsider its objectives for inflation as incoming Prime Minister Shinzo Abe urges more action to end price declines.

The U.S. economy grew at a 3.1 percent annual rate in the third quarter, compared with a previously estimated 2.7 percent advance, according to Commerce Department figures. The report reflected the first gain in state and local government spending in three years, more consumer purchases and a smaller trade gap.

The index of leading indicators fell in November, pointing to a slowdown early next year. The Conference Board’s gauge of the outlook for the next three to six months dropped 0.2 percent after a revised 0.3 percent gain in October that was larger than initially reported, the New York-based group said.

The report from the Realtors group showed sales were strongest since a first-time buyer credit was first due to expire in November 2009. Excluding the period influenced by the tax break, sales were the strongest since July 2007, before the recession began.

Median Price

The median home price increased 10.1 percent to $180,600 from $164,000 in November 2011. Sales of higher-priced houses are a growing share of the market, driving the advance, Lawrence Yun, NAR chief economist, said in a news conference as the figures were released.

Improving values are helping to drive gains in consumer confidence. The Bloomberg Consumer Comfort Index climbed to minus 31.9 in the period ended Dec. 16, the highest level in eight months, from minus 34.5 in the prior week. The gauge is within a half point of a four-year high reached in April.

Shoppers are spending in part as a result of housing-market gains, said Robert Hull, chief financial officer at Lowe’s, based in Mooresville, North Carolina.

This year “represents the first year of growth across all of the core housing metrics: housing turnover, single-family starts and median home prices,” Hull said at a Dec. 5 investor conference. “These recent positive trends are helping consumers regain confidence in both their local housing markets and their home value.”

Furniture Sales

Furniture sales at Pier 1 Imports Inc. have been gaining momentum all year, president and chief executive officer Alexander Smith said. On Dec. 13, the company reported its 13th consecutive quarter of sales and profit growth.

The improvement is due in part to “what we view as the very beginnings of a long-awaited recovery in the housing market,” Smith said on an earnings call.

The job market remains an area of weakness for the economy, explaining why Federal Reserve policy makers this month said they would keep the benchmark interest rate near zero as long as unemployment remains above 6.5 percent, and if the Fed projects inflation of no more than 2.5 percent in one or two years.

The number of Americans filing first-time claims for unemployment insurance payments rose for the first time in five weeks, Labor Department figures showed.

Jobless Benefits

Applications for jobless benefits increased by 17,000 to 361,000 in the week ended Dec. 15. Economists forecast 360,000 claims, according to the Bloomberg survey median.

The home-sales figures are the latest evidence of strength in the industry at the heart of the last recession. The number of building applications issued in November rose to a four-year high, Commerce Department data showed.

Residential construction may add to economic growth this year for the first time since 2005, boosting gross domestic product by 0.3 percentage point, according to Joseph LaVorgna, chief U.S. economist at Deutsche Bank AG in New York. That contribution may double next year and reach about 1 percentage point when related industries such as furnishings and remodeling are added, he said last week.

“The housing recovery should pick up strength,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “Housing is going to add to growth.”

© Copyright 2023 Bloomberg News. All rights reserved.

Sales of previously owned homes climbed to a three-year high in November, reinforcing forecasts that the industry is set to contribute to U.S. annual economic growth for the first time since 2005.
Thursday, 20 December 2012 02:34 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved