US new home sales sink to a record low

Julian Harris
Follow Julian
AMERICA’S dire housing market plumbed new lows in 2011, recording the worst year on record for sales of new homes.

Sales fell 2.2 per cent in the final month of the year, data revealed yesterday, to a seasonally-adjusted annual rate of 307,000 homes.

Yet separate figures appear to show that elsewhere in the US economy, the recovery is well on track.

New orders for US manufactured goods climbed by a better than expected three per cent in December, a number that was likely boosted by a surge in orders at aircraft builders like Boeing.

“December’s durable goods orders figures are encouraging, suggesting that after stagnating in the fourth quarter of last year, business investment started to pick up again right at the end of that quarter,” commented Capital Economics in a note. “The latter is a good sign as far as the first quarter of this year goes.”

The US outlook for the next three to six months is continuing to improve, according to separate official data released yesterday by the Conference Board.

The leading indicators rose for the third straight month in December, the index increasing by 0.4 per cent after a 0.2 per cent increase in November and a 0.6 per cent jump in October.

Survey by Federal Reserve Banks in Chicago and Kansas also pointed to upturns. The Chicago Fed’s national activity index moved into positive territory at 0.17 in December, from -0.46 in November. A manufacturing survey in Kansas showed that activity has rebounded at the start of this year.

Meanwhile Labor Department data showed new US claims for unemployment benefits rising last week but the underlying trend continued to point to improving labour market conditions.

Fresh claims increased 21,000 to a seasonally adjusted 377,000 last week.