Strong U.S. housing data offers ray of hope for slowing economy

Fri Jan 22, 2016 1:29pm EST
 
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales rebounded strongly in December from a 19-month low and prices surged, indicating the housing market recovery remained intact despite signs of a sharp deceleration in economic growth in recent months. The National Association of Realtors said on Friday existing home sales jumped a record 14.7 percent to an annual rate of 5.46 million units, after being temporarily held back by the introduction of new mortgage disclosure rules, which had caused delays in the closing of contracts in November.

Sales were also boosted by unseasonably warm weather and buyers rushing into the market in anticipation of higher mortgage rates. The Federal Reserve raised its benchmark overnight interest rate in December, the first rate hike in nearly a decade.

"We knew a significant number of closings were delayed by new regulations that came into effect in October. Overall, 2015 was a very good year and we're positioned for a strong spring market," said Stephen Phillips, president of Berkshire Hathaway Home Services in Chicago.

The mortgage disclosure rules are intended to help homebuyers understand their loan options and shop around for loans suited to their financial circumstances. Realtors said the rules had significantly increased contract closing time frames.

November's sales pace was unrevised at 4.76 million units. Economists had forecast home resales rebounding 8.9 percent to a 5.20-million rate in December. Sales rose 6.5 percent to 5.26 million units in 2015, the strongest since 2006.

Last month's snap-back should offer some assurance that domestic demand remains fairly healthy, even as growth appears to have braked sharply at the end of 2015 because of a downturn in manufacturing and mining activity.

The dollar was trading higher against a basket of currencies, while prices for U.S. government debt fell. The housing index .HGX rallied 2.04 percent, outperforming a broadly firmer U.S. stock market. Shares in the nation's largest homebuilder D.R. Horton Inc (DHI.N: Quote) were up 2.59 percent and Lennar Corp (LEN.N: Quote) advanced 2.16 percent.

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Homes are seen for sale in the northwest area of Portland, Oregon, in this file photo taken March 20, 2014.  REUTERS/Steve Dipaola/Files