(MENAFN- Gulf Times) New US single-family home sales rebounded in July and consumer confidence increased to a seven-month high in August, pointing to underlying strength in the economy that could still allow the Federal Reserve to raise interest rates this year.
Other data yesterday showed moderate gains in house prices, which should support consumer spending and keep home purchasing affordable, especially for first-time buyers.
New home sales increased 5.4% to a seasonally adjusted annual rate of 507,000 units, the Commerce Department said yesterday. Those sales, which account for 8.3% of the market, were up 25.8% compared to July of last year.
In a second report, the Conference Board said its consumer index jumped to 101.5 this month, the highest reading since January, amid optimism over the labour market. The index was up from July's reading of 91.0.
Prices for US Treasuries fell after the data, while stocks slightly pared solid gains. The US dollar was stronger against a basket of currencies.
The reports, which added to a steady stream of data that have painted an upbeat picture of the US economy amid global turmoil, are likely to be welcomed by Fed officials.
Chances of a September interest rate hike have diminished in the wake of the Fed's July 28-29 policy meeting, which showed officials at the US central bank worried about persistently low inflation.
A global stock market sell-off, sparked by slowing economic growth in China, and renewed weakness in crude oil prices also have cast doubts on the prospect of monetary policy tightening next month.
Barclays on Monday pushed back its forecast for the first rate increase since 2006 to March of next year from September 2015, citing the global stock markets turbulence.
The US housing market is gaining stream, with data last week showing home resales jumped to a near 8-1/2-year high in July and ground breaking on new home building climbing to its highest level since October 2007.
The recovery in the sector, which touches almost all spheres of the US economy, is being driven by a tightening labour market. Solid job growth is boosting confidence among Americans and encouraging young adults to move into homes of their own.
Housing is expected to contribute to gross domestic product this year, but remains constrained by a persistent shortage of homes available for sale.
A third report showed the S&P/Case Shiller composite index of 20 metropolitan areas in June gained 5.0% year over year compared to a gain of 4.9% in May. Denver, San Francisco, and Dallas again experienced the biggest year-over-year home appreciation among the 20 cities, with price increases of 10.2%, 9.5% and 8.2%, respectively.
"The price gains have been consistent as the unemployment rate declined with steady inflation and an unchanged Fed policy," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. The sturdy housing market is boosting homebuilders.
Toll Brothers, the largest US luxury home builder, said yesterday orders had risen 16% so far in the quarter started in August, outpacing the 12% rise in the company's third quarter. In July, new homes sales surged 23.1% in the Northeast to the highest level since May 2014. Sales increased 6.7% in the West and were up 5.8% in the populous South. In the Midwest, sales fell 6.9%.
The stock of new houses for sale increased 1.9% to 218,000 last month, the highest level since March 2010. Still, supply remains less than half of what it was at the height of the housing boom.
At July's sales pace it would take 5.2 months to clear the supply of houses on the market, down from 5.3 months in June. The median price of a new home rose 2% from a year ago to $285,900.
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