US home sales climb at fast pace

[Naveed Yaseen]

WASHINGTON: New orders for long-lasting US made goods rose in February for the first time in seven months and new home sales rebounded, government reports showed on Wednesday, suggesting the economic downturn might be easing a bit.

The Commerce Department said durable goods orders rose 3.4 per cent to $165.6 billion in February, the biggest gain since December 2007, after a 7.3 per cent plunge the prior month.

In another report, the department said sales of newly built US single-family homes rose at their fastest pace in 10 months in February.

The data are the latest in a series of recent economic reports indicating the downturn in the economy, after a brutal fourth quarter, may be moderating.

“This is consistent with the data that we’ve seen for January and February, reflecting the fact that the pace of the decline in the US economy has stabilised somewhat from the significant decline seen in November and December,” said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon, in New York.

US equity indexes extended gains after the new home sales data, while US Treasury debt prices fell and the US dollar was lower against the euro.

Recent data, including retail sales and housing, have pointed to some signs of a slowdown in the pace of the economy’s downturn. The US economy slipped into recession in December 2007.

New durable goods orders excluding transportation rose 3.9 percent in February, the largest gain since August 2005, the Commerce Department said. Orders for machinery soared 13.5 per cent in February, the biggest increase since March 2004.

One of the few weak spots in the report was civilian aircraft and parts, which dropped 28.9 per cent after Boeing reported only four new aircraft orders in the month after 18 orders in January.

Motor vehicle and parts eased 0.6 per cent after a 7 6 per cent tumble in January.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, expanded 6.6 per cent in February. The prior month was revised to an 11.3 per cent drop, previously reported as a 5.7 per cent decline.

Inventories of manufactured durable goods fell for a second consecutive month in February, easing 0.9 per cent to $336.8 billion, after dropping 1.1 per cent in January.

A separate report from the Commerce Department showed sales of sales of newly built US homes rose 4.7 per cent to a 337,000 annual pace, the fastest increase since April last year, from 322,000 in January.

Despite the increase, February sales were the second lowest ever after the drop in January to the slowest pace in records going back to 1963, the department said.

Economists, who forecast another decline in sales, are still encouraged.

“The tone of the data is starting to look a little better. We might just be bouncing along a floor. Certainly the momentum is improving but there are still a lot of headwinds for the economy,” said Carl Lantz, an interest rate strategist at Credit Suisse in New York.

The collapse of the US housing market was the main trigger for the current economic slump. Stability in the housing market is seen as a key ingredient for the economy’s recovery.

The median sales price in February fell a record 18.1 per cent to $200,900 from a year earlier, the department said. The median marks the half-way point, with half of all houses sold above that level and half below

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