US data shows housing uptick

City A.M. Reporter
Pending sales of previously owned US homes rose to a four-month high in August, implying the housing market was regaining some stability after recent steep declines following the end of a home-buyer tax credit.

Another report yesterday showed new orders received by domestic factories fell 0.5 per cent in August as demand for transportation equipment fell sharply. Analysts had forecast a drop of 0.4 per cent in August.

However, excluding the transportation segment, factory orders rose 0.9 per cent.

The data offered few fresh clues on whether the Federal Reserve would embark on a new round of monetary policy easing next month, as widely anticipated by financial markets.

“Sales have stabilised at very, very low levels after the expiration of the federal tax credits. At these low levels, you could see some good percentage increases in sales, but it doesn’t show any sustainable uptrend in housing conditions,” said Ryan Wang, an economist at HSBC Securities in New York.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in August, increased 4.3 per cent to 82.3 from July. Economists polled by Reuters forecast the index, which leads existing home sales by a month or two, rising three per cent in August from July. Compared to August last year, pending home sales were down 20.1 per cent.

The group’s chief economist, Lawrence Yun, said the latest data are consistent with a gradual improvement in home sales in upcoming months.

“Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” he said in a statement.

“However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence.”