USD News

While the Commerce Department released a report on Tuesday showing that U.S. building permits came in above economist estimates in the month of October, the release of data on housing starts was once again delayed as a result of the recent government shutdown.

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While the Commerce Department released a report on Tuesday showing that U.S. building permits came in well above economist estimates in the month of October, the release of data on housing starts was once again delayed as a result of the recent government shutdown.

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After reporting a substantial acceleration in the pace of growth in Chicago-area business activity last month, MNI Indicators released a report on Wednesday showing a slowdown in the pace of growth in the month of November. MNI Indicators said its Chicago business barometer dipped to 63.0 in November after jumping to 65.9 in October, although a reading above 50 still indicates growth.

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Sales of new US homes rose in October by most in three decades

Purchases of new U.S. homes surged in October by the most in three decades, signaling buyers are starting to take higher mortgage rates in stride.

Sales jumped 25.4 percent to a 444,000 annualized pace, following a 354,000 rate in the prior month that was the weakest since April 2012, figures from the Commerce Department showed today in Washington. The median forecast of 62 economists surveyed by Bloomberg called for 429,000.

Home sales are regaining strength as gains in employment and stock prices help consumers adjust to this year’s increase in borrowing costs and property values, which have hurt affordability. Builders such Hovnanian Enterprises Inc. (HOV) are optimistic about the outlook for the market, which will need to expand to meet the needs of a growing population.

“The platform has now been set for a sustained uptick,” Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, said before the report. “It’s not barn-burning levels of growth, but we should be well off the lows we saw” in prior months.

Economists’ estimates in the Bloomberg survey ranged from 375,000 to 450,000. The 25.4 percent increase from September was the biggest one-month surge since May 1980.

Other reports today showed hiring picked up in November and the trade deficit narrowed in October.

Companies boosted payrolls by a more-than-projected 215,000 last month, according to figures from the ADP Research Institute in Roseland, New Jersey. The median forecast of 40 economists surveyed by Bloomberg called for a 170,000 advance. Estimates ranged from gains of 125,000 to 210,000.

Record Exports

The trade gap decreased 5.4 percent to $40.6 billion from a $43 billion shortfall in September that was larger than previously estimated, the Commerce Department also reported. The median forecast in a Bloomberg survey of 63 economists called for a $40 billion deficit. Exports climbed to a record.

Today’s Commerce Department report on home sales included combined October and September data after the figures were delayed due to the government shutdown. Purchases were down 6.6 percent in September from a 379,000 annualized pace in August that was weaker than the previously reported 421,000. The revisions and September data indicate the market took a bigger hit than previously estimated following the increase in mortgage rates.

The median sales price decreased 0.6 percent from October 2012 to $245,800, today’s report showed.

Purchases rebounded in all four U.S. regions in October, led by a 34 percent jump in the Midwest.

Reducing Supply

The supply of homes dropped to 4.9 months from 6.4 months in the September which was the highest since August 2011. There were 183,000 new houses on the market at the end of October, down from 190,000 the prior month that was the most since December 2010.

New-home sales, tabulated when contracts are signed, are considered a timelier barometer than purchases of previously owned dwellings, which are calculated when a contract closes. New construction accounted for about 7 percent of the residential market in 2012.

In one sign of growing momentum, applications for building permits reached a five-year high in October. Permit requests rose 6.2 percent to a 1.03 million annualized rate, the most since June 2008, after a September pace of 974,000, the Commerce Department reported last week.

The surge was paced by a jump in applications for apartments and condominiums, which increased 15.3 percent after a 20.1 percent gain in September.
Existing Homes

The annual pace of existing home sales fell in October to 5.12 million, the lowest level in four months, with buyers constrained by a limited supply and higher mortgage rates, the Realtors group reported last month. There were 2.13 million previously owned homes for sale at the end of October, down from 2.17 million the month prior.

Builders see plenty of room for growth, said David G. Valiaveedan, vice president for finance at Hovnanian Enterprises Inc. based in Red Bank, New Jersey. At the market peak in 2005, builders began work on more than 2.2 million homes, compared with an average 907,000 annualized pace per month in 2013 through August. The industry “is way under-producing the long-term demand,” he said.

“The experience of the last cycle in terms of the depth and length of the recession in housing has been a lot different than previous cycles,” Valiaveedan said at a Nov. 14 conference. “We firmly believe we have a lot of runway ahead of us and a lot of opportunity.”

New home sales showed a substantial increase in the month of October, according to a report released by the Commerce Department on Wednesday, with the increase in sales more than offsetting the decrease seen in September.The report said new home sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 in October after sliding 6.6 percent to 354,000 in September.

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Personal income in the U.S. unexpectedly showed a modest decrease in the month of October, according to a report released by the Commerce Department on Friday.

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While the Federal Reserve Bank of New York released a report on Monday showing that its index of regional manufacturing activity bounced back into positive territory in December, the bank said conditions for New York manufacturers were flat.

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Consumer prices in the U.S. came in unchanged in the month of November, according to a report released by the Labor Department on Tuesday, with a steep drop in energy prices offsetting increases in prices for shelter and airline fares. The Labor Department said its consumer price index was unchanged in November after edging down by 0.1 percent in October.

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New residential construction showed a substantial increase in the month of November, according to a report released by the Commerce Department on Wednesday, with housing starts jumping to their highest level in over five years. The report said housing starts surged up 22.7 percent to a seasonally adjusted annual rate of 1.091 million in November from a rate of 889,000 in October.

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Suggesting gradually strengthening economic conditions, the Conference Board released a report on Thursday showing that its index of leading U.S. economic indicators rose by slightly more than expected in the month of November.

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