Wednesday, 25 April 2012

Markets rise as US new home sales show recovery

Markets recovered somewhat on Tuesday from the previous day's falls, with the S&P 500 rising 0.4 percent and the STOXX Europe 600 gaining 1.0 percent.

Better-than-expected housing data from the US on Tuesday helped markets. New home sales came in at a 328,000 annual rate in March, higher than the median estimate of 319,000 from a Bloomberg survey. This rate was down from an upwardly revised rate of 353,000 in February, which had been the highest in two years.

Another report on Tuesday showed that the S&P/Case-Shiller 20-city index of home prices in the US fell 3.5 percent in February, the smallest 12-month drop since February 2011.

However, consumer confidence weakened slightly in April with the Conference Board's consumer confidence index falling to 69.2 from 69.5 in March.

Nevertheless, Calculated Risk says that the new home sales report provides “further confirmation that the recovery for the housing industry has started” and that the “debate is now about the strength of the recovery, not whether there is a recovery”.

However, Robert Shiller told Reuters on Tuesday that the housing market is likely to remain weak. “I worry that we might not see a really major turnaround in our lifetimes,” Shiller said.

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