Home sales plunge 12pc for July as US economy stuck in rut
HOME sales probably plunged in July, and orders for long-lasting goods climbed for the first time in three months as the US strained to sustain the recovery from the worst recession since the 1930s, economists said before reports this week.
Purchases of new and existing houses dropped 12pc to a 5.01-million annual pace, the lowest since March 2009, according to the median forecast of 54 economists surveyed by 'Bloomberg News'. Durable-goods bookings climbed 3pc last month, the survey showed.
"The economy is in a rut," said Russell Price, a senior economist at Ameriprise Financial in Detroit. "We lost the momentum in the second quarter and now we're really struggling to regain any momentum at all."
Another report this week may show the economy grew from April to June even less than previously estimated, one reason why consumer spending has failed to pick up.
Federal Reserve Chairman Ben S Bernanke may shed more light on policy-makers' outlook this week when he addresses central bankers from around the globe. Earlier this month, policy-makers said recovery was "more modest" than they had projected, prompting them to take additional steps to revive growth.
Sales of previously owned homes slumped 13pc in July to a 4.68-million annual rate. Demand for new houses was little changed at a 330,000 annual rate. New-home sales reached a record-low 267,000 pace in May, the month after a government tax credit expired.
The incentive, worth as much as $8,000 (€6,293), propelled demand earlier in the year as buyers rushed to qualify ahead of the April 30 deadline for signing contracts and original June 30 deadline for closing deals.
Sales have since plunged, indicating Americans lack the confidence to take on such a large purchase.
"There is definitely a pullback in demand," Richard Dugas, chief executive officer of Pulte Group, said recently. "We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home." (Bloomberg)