New U.S. single-family home sales race to 10-month high

Wed Jan 27, 2016 2:44pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - New U.S. single-family home sales surged in December to their highest level in 10 months, the latest indication that the housing sector remains on a firmer footing despite a massive stock market sell-off and slowing economic growth.

The Commerce Department said on Wednesday sales rose 10.8 percent to a seasonally adjusted annual rate of 544,000 units, the highest level since February. Sales last month were likely buoyed by unseasonably mild weather and a rise in the supply of homes on the market, which increased choices for buyers.

"Don't count the economy out yet with the darkening skies seen in January as world stock markets fell on worries over China and crude oil and world growth. Worries don't become reality," said Chris Rupkey, chief economist at MUFG Union Bank in New York.

The Federal Reserve on Wednesday acknowledged that economic growth had slowed late last year. The U.S. central bank kept its benchmark overnight interest rate unchanged and said it was "closely monitoring global economic and financial developments." The Fed in December raised its benchmark overnight interest rate, the first rate hike in nearly a decade.

The dollar was trading lower against a basket of currencies, and prices for U.S. government debt fell. U.S. stocks were down in volatile trade.

New home sales soared 14.5 percent to 501,000 units in 2015, the highest level since 2007. Economists had forecast new home sales, which account for about 9.1 percent of the housing market, edging up to a 500,000 unit-rate last month.

Housing is being supported by tightening labor market conditions, which are spurring a rise in household formation.

The data came on the heels of a report last Friday showing a record increase in home resales in December from a 19-month low in November.   Continued...

Workers remove wood panels from the foundation of a house being constructed in Phoenix, Arizona, August 23, 2011. REUTERS/Joshua Lott