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Existing Home Sales Fall, Factory Activity Picks Up

AP with Reuters
Thursday, 20 Oct 2011 | 10:23 AM ET

The number of Americans who bought previously occupied homes fell in September while other economic reports showed modest improvements in the economy.

AP

A leading index of economic activity posted modest gains, while a gauge of factory activity in the Mid-Atlantic region unexpected expanded.

Still, the housing market continued to weight on the economy. Home sales are on pace to match last year's dismal figures — the worst in 13 years.

The National Association of Realtors said home sales fell 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. That's below the 6 million that economists say is consistent with a healthy housing market.

The housing market has been hobbled by foreclosures, weak demand and falling home prices. Last year 4.91 million previously occupied homes were sold, the lowest level since 1997.

Homes at risk of foreclosure fell to 30 percent of sales, down from 31 percent in August. Many of the sales went to investors, who are buying homes under $100,000.

First-time homebuyers, critical to a housing recovery, were unchanged at 32 percent of all sales.

Leading Indicators Improve

According to a separate index, the U.S. economy faces a 50 percent chance of recession despite modest gains in a leading index of activity, a private sector research group said on Thursday.

The Conference Board's leading index rose 0.2 percent last month, a smaller rise than analysts had forecast in a Reuters poll, following a 0.3 percent gain in August.

Still, the group's economists warned the soft pace of growth in the index was consistent only with an anemic expansion, insufficient to put a dent in the nation's 9.1 percent jobless rate.

"This sluggish economy is going to be here for a while," said Ataman Ozyildirim, economist at The Conference Board.

Philly Fed Index Expands

Factory activity in the U.S. Mid-Atlantic region unexpectedly expanded in October to its highest level in six months, rebounding from a weak reading the month before, a Federal Reserve survey showed on Thursday.

The Philadelphia Federal Reserve Bank said its business activity index jumped to 8.7 from minus 17.5 the month before.

That far exceeded economists' expectations for minus 9.0, according to a Reuters poll, and was the highest since April 2011.

Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management.

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