FLASH: Sales of new US single-family homes rose 7-month highs in December
Other data Tuesday showed an acceleration in growth in the vast services sector in February, powered by a surge in new orders.
The moderation in the pace of hiring fits in with expectations of slower economic growth as the stimulus from a $1.5-T tax cut and increased government spending slows.
The Commerce Department said Tuesday new home sales increased 3.7% to a seasonally adjusted annual rate of 621,000 units, the highest mark since May 2018. November’s sales pace was revised down to 599,000 units from the previously reported 657,000 units.
Economists polled forecasted new home sales falling 8.7% to a pace of 600,000 units in December.
USS new home sales are drawn from permits and tend to be volatile on M-M basis. They fell 2.4% from a year ago. Single-family home sales rose 1.5 percent in Y 2018.
The release of the December report was delayed by a 5-weeks because of the partial shutdown of the federal government that ended on 25 January.
Though house price inflation has slowed and mortgage rates are hanging at 12-month lows, economists expect the housing market to remain weak for a while because of persistent land and labor shortages.
Despite the anticipated Q-1 weakness, the economy’s fundamentals remain solid.
In a separate report Tuesday, the Institute for Supply Management (ISM) said its non-manufacturing activity index increased 3.0 points to a reading of 59.7 last month.
A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of US economic activity. January’s drop in the services sector index was largely blamed on financial market volatility and the government shutdown.
US Treasury yields jumped after the ISM report, while US stocks pared losses. The USD was trading slightly higher against a basket of peer currencies.
At December’s sales pace it would take 6.6 months to clear the supply of houses on the market, down from 6.7 months in November. Nearly 67% of the houses sold last month were either under construction or yet to be built.
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