Sharp fall in sales of new US homes
Sharp fall in sales of new US homes
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: March 1 2007 02:00 | Last updated: March 1 2007 02:00
Americans bought far fewer new homes last month, according to government data released yesterday that showed sales fell at the fastest rate in 13 years.
Sales of newly built homes fell 17 per cent as the backlog of houses standing empty remained stubbornly high, figures from the Commerce Department showed.
The drop was greater than even the most pessimistic Wall Street economists predicted and sent shares in housebuilders tumbling. Home Depot shares also slipped as the DIY store said it expected anaemic sales and lower profits this year.
The slowdown prolongs uncertainty over the duration and depth of the construction sector slump and underlines the risk to economic growth from the weak housing market.
House prices also eased as the median cost of a new home fell 2.1 per cent from a year ago to $239,800. The pace of sales fell to 937,000 from a rate of 1.1m the previous month, while inventories of unsold homes stood at 537,000. The biggest drop was in the west, where sales fell 37 per cent to an annual rate of 166,000.
Stephen Stanley, chief economist at RBS Greenwich Capital, said: "Builders will probably have to continue to work off bloated stocks of finished homes for most of 2007.''
The Federal Reserve views the overhang of unsold homes as cause for concern but remains cautiously optimistic the sector is stabilising and will not derail the economy. The central bank yesterday continued to forecast moderate economic expansion this year after fresh figures showed the economy grew at a much slower rate than previously thought last quarter.
Drew Matus, an economist at Lehman Brothers, said: "The figures suggest the eco-nomy is playing out largely as the Fed expected, with a little bit of worrisome weakness in the housing market."
The economy grew at a rate of 2.2 per cent in the fourth quarter against an estimate of 3.5 per cent. Government figures released yesterday also showed prices cooled as core inflation slowed to 1.9 per cent from an estimate of 2.1 per cent.
Peter Kretzmer, an analyst at Bank of America, said yesterday's data pointed to growth "well below" trend this quarter.
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: March 1 2007 02:00 | Last updated: March 1 2007 02:00
Americans bought far fewer new homes last month, according to government data released yesterday that showed sales fell at the fastest rate in 13 years.
Sales of newly built homes fell 17 per cent as the backlog of houses standing empty remained stubbornly high, figures from the Commerce Department showed.
The drop was greater than even the most pessimistic Wall Street economists predicted and sent shares in housebuilders tumbling. Home Depot shares also slipped as the DIY store said it expected anaemic sales and lower profits this year.
The slowdown prolongs uncertainty over the duration and depth of the construction sector slump and underlines the risk to economic growth from the weak housing market.
House prices also eased as the median cost of a new home fell 2.1 per cent from a year ago to $239,800. The pace of sales fell to 937,000 from a rate of 1.1m the previous month, while inventories of unsold homes stood at 537,000. The biggest drop was in the west, where sales fell 37 per cent to an annual rate of 166,000.
Stephen Stanley, chief economist at RBS Greenwich Capital, said: "Builders will probably have to continue to work off bloated stocks of finished homes for most of 2007.''
The Federal Reserve views the overhang of unsold homes as cause for concern but remains cautiously optimistic the sector is stabilising and will not derail the economy. The central bank yesterday continued to forecast moderate economic expansion this year after fresh figures showed the economy grew at a much slower rate than previously thought last quarter.
Drew Matus, an economist at Lehman Brothers, said: "The figures suggest the eco-nomy is playing out largely as the Fed expected, with a little bit of worrisome weakness in the housing market."
The economy grew at a rate of 2.2 per cent in the fourth quarter against an estimate of 3.5 per cent. Government figures released yesterday also showed prices cooled as core inflation slowed to 1.9 per cent from an estimate of 2.1 per cent.
Peter Kretzmer, an analyst at Bank of America, said yesterday's data pointed to growth "well below" trend this quarter.
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