US home sales up?

Home sales in the United States probably increased last month, a sign the real estate market is stabilising after the expiration of a tax credit caused demand to plunge, economists said ahead of reports due to be released this week.

Purchases of new and previously owned homes rose 7 per cent to a combined 4.395 million annual pace, according to the median forecast in a Bloomberg News survey.

A separate report may show orders for long-lasting goods excluding transportation equipment rebounded last month.

“Housing is in a fragile bottoming process,” said Mr Aaron Smith, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. The projected gains in home sales and durable goods are “consistent with stabilising growth, albeit it at a slower” pace than earlier this year, he added.

Builders such as Hovnanian Enterprises face a housing market depressed by unemployment close to 10 per cent and rising foreclosures, making it difficult for mortgage rates near record lows to stoke demand.

Combined with growth in manufacturing, the figures underscore the Federal Reserve’s view that the economy, while decelerating, will avoid slipping back into a recession.

Fed chairman Ben S Bernanke and his fellow US central bankers meet tomorrow to determine whether the economy needs additional stimulus.

The Fed’s benchmark interest rate is already in a range from zero to 0.25 per cent, where it has been since 2008.

Source : Today – 20 Sep 2010

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