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Mon, Apr 19, 2010 - Page 10 News List

US home sales, orders climbing: reports

PICKING UPPurchases of new and existing homes rose to a combined annual rate of 5.63 milion, analyst estimates show. Bookings for new goods may also have risen

BLOOMBERG

Home sales and orders for long-lasting goods probably climbed last month, increases that enhance the odds the US recovery will be sustained, economists said before reports this week.

Purchases of new and existing homes rose to a combined 5.63 million annual rate, the first gain in four months, according to the median estimate of economists surveyed by Bloomberg. Bookings for goods meant to last several years may have advanced for a fourth straight time.

The advances in durable goods would be the longest since 2005, highlighting how manufacturing is at the forefront of the economic rebound as global demand strengthens. The improvement in housing, meanwhile, is more dependent on help from the federal government as buyers rush to beat a deadline to qualify for a tax credit, indicating the industry will take time to rally.

“Business spending does seem to be picking up and I think that is going to be one of the key elements for the expansion,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. On housing, “anything we get on the positive side would be an improvement.”

Reports last week showed builders turned less pessimistic this month and housing starts for last month were at the highest level in more than a year.

Sales of previously owned houses probably rose to a 5.3 million annual rate last month from a 5.02 million pace a month earlier, a report from the National Association of Realtors could show on Thursday. A day later, data from the US Commerce Department could show purchases of new homes climbed 5.5 percent to a 325,000 rate, according to the survey median.

The Obama administration in November extended a credit for first-time homebuyers and expanded it to include some current owners. The deadline for signing purchase contracts is the end of this month and transactions must be completed by June 30.

“There is potential for sales to jump a bit” in coming months ahead of the deadline, said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania.

After that, the state of the labor market, mortgage rates and developments surrounding foreclosures, which are depressing property values and adding to already bloated inventories, will determine housing’s fate, Smith said.

The outlook for factories is less ambiguous as improving economies overseas propel exports and rising US demand prompts companies to update equipment and boost stockpiles. Orders for durable goods probably increased 0.2 percent last month after rising 0.9 percent in February, a Commerce Department report could show on Friday.

Sales overseas rose in February to the highest level since October 2008, the Commerce Department reported last week.

Manufacturing last month expanded at the fastest pace since 2004, according to a national survey of purchasing managers.

General Electric Co “saw encouraging economic signs,” in the first quarter, chief executive officer Jeffrey Immelt said in a statement on Friday. The company expects results this year to be little changed from last year, with “upside potential,” Immelt said.

GE now gets more than half of its revenue from outside the US Immelt increased the research budget in total by about 7 percent and has said he plans to boost it more this year. In the first quarter, GE raised its research and development investment by 16 percent, Immelt said.

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