Tuesday, 28 February 2006

US new home sales fall but little sign of liquidity shortfall elsewhere

Evidence of a slowing US housing market continues to accumulate. From Reuters:

Sales of new U.S. homes fell 5 percent in January to their slowest pace in a year while the number of homes on the market hit a record high, according to a government report on Monday that signaled further cooling in the housing market.

However, the slide in prices was halted.

Home prices, however, have been more resilient, and economists chalk that up to stubborn sellers trying to cash out at the market's highs. For January, Commerce Department data show the median home sales price rose 4 percent to $238,100, for example.

A graphical representation of the trends can be found at Calculated Risk.

Across the Atlantic, in contrast, the UK housing market continues its recovery. From another Reuters report:

House prices rose for a third consecutive month in February and at the fastest pace since June 2004, according to property consultant Hometrack's latest survey published on Monday.

It said that prices rose by 0.4 percent during February, bringing the average cost of a home to 161,700 pounds, although prices were still down 0.5 percent on a year earlier.

And from yet another Reuters report on UK home loans:

Mortgage approvals -- the number of loans agreed but not yet completed -- totalled 45,039 last month. That was 32 percent higher than January 2005, but weaker than December's 51,233.

The figures are not adjusted to reflect seasonal patterns in the housing market, which means they can be volatile from month to month. Still, analysts said the figures showed the property market remained in rude health.

Which all suggest that rate cuts by the Bank of England might well come a bit later than many are anticipating.

And for all the talk about interest rate increases elsewhere and the unwinding of carry trades -- see for example, this article entitled "Global credit ocean dries up" -- money supply in the euro area continued to grow at a robust pace in January, with M3 growing at an annual rate of 7.6 percent.

1 comment:

Boston-Real-Estate-Watch said...

You made some interesting points in your recent posting. Keep up the good work.

Boston Condos

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