US home sales probably fell in Jan

Home sales in the United States probably fell last month, while orders for long-lasting goods climbed, a reminder that housing lags behind manufacturing as the US recovery strengthens, economists said before reports this week.

Combined purchases of new and existing homes fell 2 per cent to a 5.5-million annual pace, according to the median forecast of economists surveyed by Bloomberg News. Durable-goods bookings increased 3 per cent last month, the survey showed.

Unemployment hovering near 9 per cent means foreclosures may keep rising, adding to a glut of inventory that is depressing property values, hurting builders and homeowners. Growing exports, combined with increasing profits and tax incentives signed into law by President Barack Obama in December, will probably keep orders flowing to companies like Caterpillar.

“Housing is basically flat on its back, and manufacturing is growing very fast, probably the biggest contrast in the economy,” said Mr Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. “Home prices are still on the way down.”

Sales of existing homes fell 1.5 per cent to a 5.2 million annual pace, economists surveyed by Bloomberg forecast the National Association of Realtors will report on Wednesday. Commerce Department figures the following day may show demand for new homes dropped by 8.8 per cent to a 300,000 rate, the survey showed. Purchases reached a record low 274,000 pace in August.

Orders for durable goods rose last month after a 2.3-per-cent decline the month prior, economists forecast the Commerce Department will report on Thursday. Excluding demand for transportation, which is often volatile, bookings may have climbed for a third month.

The business spending that helped lead the economy out of recession may gain a second wind from a new tax provision that was part of Mr Obama’s compromise with congressional Republicans. Companies will be able to depreciate 100 per cent of investments in capital equipment this year.

Demand from abroad is also growing. Exports in December rose to the highest level since July 2008.

Caterpillar, the world’s largest maker of construction equipment, is projecting sales this year will top US$50 billion (S$63.6 billion) after coming in at US$42.6 billion last year.

Source : Channel NewsAsia – 21 Feb 2011

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