Home Sales Show Market Struggling to Find Footing

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. Reuters, By Lucia Mutikani:

Sales of newly built U.S. homes fell for a fourth straight month to a record low in February, but another rise in new orders for durable goods offered assurance that the economic recovery was on course. 

The mixed data on Wednesday underscored that while growth continues, laggards such as housing and the labor market are standing in the way of a full recovery. 

"The economy continues to be on a slow to moderate recovery. I don't see a relapse in the housing market, not right now," said Nick Kalivas, vice president of financial research at MF Global in Chicago.

Single-family home sales fell 2.2 percent to a 308,000 unit annual rate, the Commerce Department said, surprising markets that had expected a 320,000 unit pace.

In a second report, the department said new orders for long-lasting manufactured goods increased 0.5 percent in February, rising for the third straight month, and January's figures were revised higher to show a 3.9 percent increase.

Markets had expected orders to gain 0.7 percent in February from the previously reported 2.6 percent rise.

The housing data came on the heels of report on Tuesday showing existing home sales fell for a third straight month in February while the supply of houses on the market jumped.

Analysts said snowstorms that lashed parts of the country last month contributed to the drop in new home sales, but acknowledged the underlying trend remained weak.

Home sales have barely responded to the extension and expansion of a popular tax credit, which boosted purchases in the second half of 2009. This has raised concerns over the fragile housing market's recovery just as a key pillar of support is being dismantled.

The Federal Reserve will end purchases of mortgage-related securities next week, which had lowered the cost of home loans to record lows and helped the housing market claw out of a three-year slump.

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