US home sales in surprise fall in January
The National Association of Realtors (NAR) has revealed a fall in sales of previously owned homes in the US for the month of January, suggesting the extension of the $8,000 tax credit for first-time buyers is having little appeal.
The industry body said sales agreements fell 7.6% in January compared with December and the index that tracks sales agreements fell to a reading of 90.4. Analysts had expected it would expand to 97.6.
A level of 100 is equal to the average level of sales activity in 2001, when the index commenced.
However, while many attributed the fall to the severe snowstorms that swept most of the country during the month, this can’t be wholly responsible for the fall.
According to Jennifer Lee, an economist with BMO Capital Markets: “The impact of Government incentives … appears to be running out of steam, which is, frankly, a scary thought.”
The index is considered a barometer for future sales because there is a one-to-two-month lag between a signed sales contract and a completed deal.
The index has now tumbled for two of the last three months, partly due to the fact that homebuyers feel less rushed after the tax credit was extended from November 30, 2009 to April 30, 2010.
In related news, the number of US workers filing for jobless benefits fell last week from a three-month high.
The Labor Department said yesterday initial claims for state unemployment benefits dropped 29,000 to 469,000 – as expected by analysts.
In other news, the Commerce Department said US factory orders grew 1.7% in January and followed a 1.5% rise in December.
Furthermore, the Commerce Department also announced this week consumer spending rose faster than expected in January by 0.5% – the fourth consecutive monthly rise.
The rise in consumer spending, which makes up for more than two-thirds of overall economic activity in the US, was better than expectations of 0.4%.