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New US home sales to plunge
By Courtney Schlisserman |
February 23, 2009, Monday
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Print Edition
Print Edition
ECONOMISTS predict that figures to be released this week will show that sales of new homes in the United States plunged to a record low in January while durable goods orders dropped for a sixth successive month.
The median prediction of economists surveyed by Bloomberg News said that a Commerce Department report due Thursday will show that new-home sales fell to 324,000 on an annual basis. The same day, the department may report demand for goods meant to last several years dropped 2.5 percent, economists said.
A surge in foreclosures and plummeting demand for homes has depressed prices and sent the S&P/Case-Shiller 20-city home price index down 18.3 percent in December from a year earlier. Meanwhile, shrinking household worth pushed auto sales in Janu`ary to the lowest level in more than 26 years, and factories are scaling back production as demand from consumers and businesses erodes.
"Housing is going to be declining for a good, long time yet," said Derek Holt, an economist at Scotia Capital Inc in Toronto. "This is not going to be a market where builders put new supply into the market this year because of the sharp overhang."
At the December sales pace of 331,000 new homes, it would take a record 12.9 months to sell the number of houses coming on to the market - more than twice the five-to-six months supply the National Association of Realtors has said is consistent with a stable market.
Foreclosures rising
US home foreclosures rose 17.8 percent in January from a year earlier, according to a RealtyTrac Inc report.
President Barack Obama last week said that his administration will use US$75 billion to reduce mortgage rates and encourage loan modifications to keep Americans in their homes.
Excluding bookings for transportation equipment such as cars, trucks and airplanes, durable goods orders probably fell 2.2 percent in January, according to economists surveyed.
"The decline in global demand has fundamentally kicked out the final leg of support for the economy," said Joseph Brusuelas, director of Moody's Economy.com, referring to domestic and overseas demand for manufactured goods.
The median prediction of economists surveyed by Bloomberg News said that a Commerce Department report due Thursday will show that new-home sales fell to 324,000 on an annual basis. The same day, the department may report demand for goods meant to last several years dropped 2.5 percent, economists said.
A surge in foreclosures and plummeting demand for homes has depressed prices and sent the S&P/Case-Shiller 20-city home price index down 18.3 percent in December from a year earlier. Meanwhile, shrinking household worth pushed auto sales in Janu`ary to the lowest level in more than 26 years, and factories are scaling back production as demand from consumers and businesses erodes.
"Housing is going to be declining for a good, long time yet," said Derek Holt, an economist at Scotia Capital Inc in Toronto. "This is not going to be a market where builders put new supply into the market this year because of the sharp overhang."
At the December sales pace of 331,000 new homes, it would take a record 12.9 months to sell the number of houses coming on to the market - more than twice the five-to-six months supply the National Association of Realtors has said is consistent with a stable market.
Foreclosures rising
US home foreclosures rose 17.8 percent in January from a year earlier, according to a RealtyTrac Inc report.
President Barack Obama last week said that his administration will use US$75 billion to reduce mortgage rates and encourage loan modifications to keep Americans in their homes.
Excluding bookings for transportation equipment such as cars, trucks and airplanes, durable goods orders probably fell 2.2 percent in January, according to economists surveyed.
"The decline in global demand has fundamentally kicked out the final leg of support for the economy," said Joseph Brusuelas, director of Moody's Economy.com, referring to domestic and overseas demand for manufactured goods.
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