U.S. New Home Sales Jump in January; Consumer Confidence Rebounds Sharply in February
Author:
RiskCenter Staff
Location: Toronto
Date: 2013-02-27
Sales of new single-family homes in the US jumped by 15.6% in January 2013 to an annualized pace of 437,000 units. This was well above market expectations for a 380,000 reading in the month and represented the fastest pace of sales since July 2008. The initially reported 369,000 reading in December 2012 was revised higher to 378,000 units while November’s previously reported 398,000 level was revised downward to 393,000. The surge in January was broad-based among all major regions with sales rising in the West (45.3%), Northeast (27.6%), Midwest (11.1%), and South (3.2%). There were 150,000 new homes available for sale in January, which was unchanged from the previous month. At January’s pace of sales, it would take 4.1 months to clear this entire inventory of new homes, which is down sharply from 4.8 months in December and the lowest supply of new homes since March 2005. After posting a sizable 19.3% increase in 2012, the first annual increase since 2005 and the largest gain since 1992, new home sales are off to an encouraging start in 2013 as the pace of sales in January already represents a whopping 78.0% annualized increase over the fourth-quarter 2012 average. The rising demand for housing and dwindling inventories of new and existing homes on the market are supportive of further increases in homebuilding in the coming months and remains consistent with our outlook that the ongoing recovery of the US housing market from historically low levels of activity will provide a positive contribution to overall GDP growth throughout the forecast horizon. In a separate report released this morning, The Conference Board’s measure of US consumer confidence rebounded sharply from the 14-month low of 58.4 recorded in January (initially reported as 58.6), surging 11.2 points to 69.6 in February. This compares to market expectations for a 62.0 reading. The strength in February reflected significant improvements in consumers’ appraisals of both present conditions and the short-term outlook. The “expectations for six months hence” component jumped 13.9 points to a three-month high of 73.8, while the “present situation” component rose 7.1 points to a 63.3, which is its highest level since December. With respect to labour market conditions, those saying jobs were “plentiful” increased to 10.5% from 8.5% in January while those saying jobs were “hard to get” rose to 37.0% in February from 36.6% in the previous month. The net result of these changes was that the labour market differential (the difference between these two components) improved to -26.5 in January from -28.1 in the previous month. Information contained in this report has been prepared by the Economics Department of RBC Financial Group based on information obtained from sources considered to be reliable. While every effort has been made to ensure accuracy and completeness, RBC Financial Group makes no such representation or warranty, express or implied. This report is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities.
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