New home sales decline, blemishes best year since 2009
NEW HOME SALES dropped unexpectedly in December in the U.S., placing a blemish on the industry's best year since 2009.
BLOOMBERG FILE PHOTO/DANIEL ACKER
By Alex Kowalski Bloomberg News
WASHINGTON - Purchases of new U.S. homes unexpectedly decreased in December, a temporary blemish as the industry wrapped up its best year since 2009 to emerge as a bright spot for the economy.
The 7.3 percent drop in December sales to a 369,000 annual pace followed the prior month’s 398,000 rate that was faster than previously estimated, Commerce Department figures showed today in Washington. Builders sold 367,000 homes in 2012, the most in three years and the first annual increase in seven.
Mortgage rates near record lows, improved job prospects and a rising number of households should keep stoking demand and benefit builders such as Lennar Corp. and KB Home. Combined sales of new and previously owned properties last year rose 9.9 percent, the biggest annual gain since 1998 and an indication residential real estate is helping drive growth.
“2013 will show more of an increase in prices and more positive sales activity and housing starts,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a unit of the biggest U.S. mortgage lender. “We expect to see residential investment adding to growth despite a very sluggish overall pace of economic growth.”
Stocks rose, sending the Standard & Poor’s 500 Index to its first eight-day rally since 2004, as companies posted better- than-estimated earnings. The S&P 500 climbed 0.3 percent to 1,498.94 at 11:51 a.m. in New York.
The strength in housing is helping extend the U.S. economic expansion even as the global economy struggles.
Britain’s economy shrank more than forecast in the fourth quarter as the boost from the Olympic Games unwound and oil and gas output plunged, leaving the country on the brink of an unprecedented triple-dip recession. Gross domestic product dropped 0.3 percent from the three months through September, when it grew 0.9 percent, the Office for National Statistics said today in London.
In Japan, consumer prices fell in December for the seventh time in eight months, underscoring the risk that the central bank may struggle to reach a 2 percent inflation target unless it implements new easing measures earlier than planned.
The median estimate of 77 economists surveyed by Bloomberg called for a 385,000 pace on U.S. new-home sales in December. Forecasts ranged from 340,000 to 406,000 at an annual rate after a previously reported 377,000 in November.
For all of 2012, new-home sales increased 19.9 percent, the biggest jump since 1983 and the first gain since 2005.
At Lennar, the largest U.S. homebuilder by market value, revenue jumped 42 percent in the three months ended Nov. 30 from a year earlier.
“2012 was a turnaround year that confirmed what we had been seeing and communicating for several quarters, and that is that we are in fact in the early stages of the housing recovery,” Stuart Miller, chief executive officer at Miami- based Lennar, said on a Jan. 15 earnings call. “The recovery began in micro markets across the country, and it’s continued to spread.”
Los Angeles-based builder KB Home said this week that orders for new dwellings climbed 54 percent in the first seven weeks of its fiscal first quarter.
Today’s Commerce Department data showed the median price of a new home in the U.S. increased 13.9 percent last month from a year ago, climbing to $248,900.