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New Home Sales Rise 4.4%; Consumer Confidence Plunges

Reuters With CNBC.com
Thursday, 27 Dec 2012 | 10:02 AM ET
Fat Chance Productions | Iconica | Getty Images

New U.S. single-family home sales accelerated in November to the fastest pace in 2 1/2 years and median sales price jumped from the same month in 2011, but economic optimism was tempered by a report showing falling consumer confidence.

The Commerce Department said on Thursday sales climbed 4.4 percent last month to a seasonally adjusted 377,000-unit annual rate. That was in line with analysts' forecasts of a 378,000-unit annual pace.

Government data for new home sales are subject to substantial revisions. Indeed, the Commerce Department cut its estimate for sales in October by 7,000 to a 361,000-unit rate.

Consumer Confidence Continues to Slip
David Henry, Kimco Realty Corp. CEO, checks the pulse of the consumer, after this season's disappointing sales figures.

The annual sales pace for November was the quickest since April 2010.

This year, the housing sector has been point of strength in an economy beset by flagging business confidence and cooling demand abroad. The median home price of a new home rose to $246,200, up 14.9 percent from the same month in 2011.

New home building is expected to add to economic growth this year for the first time since 2005. The housing sector, however, remains a shadow of its former self.

The pace of new home sales is roughly a quarter of the all-time high clocked in July 2005 when a housing bubble was still inflating. Shortly thereafter, the bubble began to deflate, helping trigger the 2007-09 recession, which was the deepest downturn since the Great Depression.

A separate report from the Conference Board showed that consumer confidence dropped in November. U.S. consumer confidence index fell in December to 65.1 from a downwardly revised 71.5 in November, the private business research group reported on Thursday. The original figure reported for November was 73.7. Economists polled by Reuters had forecast a reading of 70.0 for the December index.

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