Housing Slump Likely to Take
New-Home Sales Fall 3.2% And Inventories Climb;Data Help Lift Stocks</DIV>
New-home sales fell in October, suggesting that the housing sector will continue to hamper economic growth in the fourth quarter at a time when business investment is also weakening.
class=times>Sales of single-family homes declined last month to a seasonally adjusted annual rate of 1.004 million, down 3.2% from September and 25.4% from a year earlier, the Commerce Department said yesterday. At the same time, the number of new homes on the market climbed to a seven-month supply, based on the current sales rate, up from a 6.7-month supply in September.
class=times>Analysts say the high inventories suggest that builders are likely to curtail new construction in the current quarter, which will further damp economic growth.
class=times>A separate report underscored the housing slump's toll on the economy. The Commerce Department said yesterday that the nation's economy grew at a seasonally adjusted annualized rate of 2.2% in the third quarter, up from its initial estimate of 1.6%.
class=times>The upward revision, which reflected a stronger-than-expected buildup in business inventories and slower-than-expected import growth, cheered investors, helping send the Dow Jones Industrial Average up 90.28 points to 12226.73 However, residential fixed investment -- a component of gross domestic product that reflects the nation's spending on housing -- plunged 18% during the quarter, the sharpest drop in 15 years, shaving 1.16 percentage points off overall growth."The drag from housing is going to get bigger," said Brian Bethune, U.S. economist at consulting firm Global Insight, who expects economic growth to slow to between 1.5% and 2% in the fourth quarter. "We're losing steam.".While most economists agree that the economy is cooling in the current quarter, as housing sales and construction activity decline, there is considerable debate about the extent of the slowdown. Earlier this week, Federal Reserve Chairman Ben Bernanke said that growth outside housing and autos remains "solid," and that the Fed is more inclined to raise short-term interest rates than to cut them.
That put Mr. Bernanke at odds with bond-market investors, who point to the cooling housing market, moderate consumer-spending gains and a recent report showing that business orders fell sharply in October as signs that the threat of inflation is easing.
David Seiders, chief economist at the National Association of Home Builders, said demand for homes appears to be stabilizing, a point that Mr. Bernanke made in explaining his upbeat view of the economy. Although new-home sales have slipped, Mr. Seiders notes that October's annualized sales rate of 1.004 million units was roughly equal to the 1.005 million average for the three months through September.
That suggests the housing market is "stabilizing when you consider the kind of downswings" occurring earlier this year, Mr. Seiders said. He expects new-home sales to level off at an annualized rate of roughly one million units in the fourth quarter and to "gradually improve" in 2007.
Although housing inventories rose last month, based on the current sales rate, the Commerce Department said that the median sales price of new homes climbed to $248,500, up nearly 14% from September. Mr. Seiders said home builders are showering buyers with sales incentives, such as paying $5,000 toward closing costs or upgrading amenities, which has helped some builders sell homes at high prices.
The Federal Reserve's latest survey of economic conditions, which was released yesterday, suggests that consumer spending is weathering the housing slump. "Despite continued softness in automobile and housing-related sales, most districts reported that consumer spending increased during October and early November," according to the Fed's "beige book," which added that the economy continues to experience "moderate growth." Labor markets remained tight, especially for the high-skilled, and wage growth was "generally moderate," the Fed said.
For now, other readings suggest inflation isn't flaring, despite signs of climbing wages. Excluding food and energy, inflation rose 2.2% in the third quarter, down from 2.7% in the second quarter, according to the personal-consumption expenditures index, the Commerce Department's inflation measure, which it updated yesterday.
Still, some economists said core inflation remains a problem, because its current level is above the Fed's perceived comfort zone of 1% to 2%. "It's good to see the inflation numbers down, but it's too early to declare victory," said Joel Naroff, chief economist at Naroff Economic Advisors. "While we may have passed the peak in inflation, it doesn't mean we're on a clear, downward slope as far as inflation goes."
[ 本帖最后由 Trend 于 2007-1-10 18:12 编辑 ] |
发表于 2006-12-1 02:05:21
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