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subject US Home Sales Weaken; Consumers Buoyant
By Glenn Somerville WASHINGTON (Reuters) - Sales of new U.S. homes tumbled at the sharpest rate in more than a decade in November, the government said on Thursday, but a separate report showed consumers' mood still buoyant as a close to 2004 neared. A slew of reports, issued ahead of a Friday holiday that will see government offices and U.S. financial markets closed for Christmas, painted a somewhat muddled picture of steady but unspectacular expansion. Sales of new homes plunged 12 percent last month, the biggest drop since a 23.8 percent fall in January 1994, to a seasonally adjusted annual rate of 1.125 million units. But industry analysts played its significance down, saying applications for new mortgages still were at healthy levels. I would not view this report as the beginning of a significant downturn, David Berson, chief economist for mortgage financing giant Fannie Mae in Washington. A forward-looking report from the University of Michigan showed its final index reading of consumer confidence for December at 97.1, up from November's final reading of 92.8 and December's preliminary reading of 95.7. The sentiment gain is a good sign that consumer spending could remain a mainstay of economic growth, said Patrick Fearon, an economist with A.G. Edwards and Sons Inc. in St. Louis, Mo. It's gratifying to see that improvement. GUARDING THEIR WALLETS Other reports on Thursday indicated consumers kept a grip on their wallets in November, spending less heartily and saving slightly more. They also showed U.S. factories enjoyed a surprisingly strong business pickup last month. Consumer spending edged up a slim 0.2 percent in November -- a fraction of October's 0.8 percent jump -- as purchases of new cars dropped sharply. The figure is closely monitored since consumers fuel two-thirds of national economic activity. The October spending figure was revised up from the department's previous report showing a 0.7 percent rise. After adjusting for inflation, November's personal spending was flat after a 0.4 percent gain in October. Incomes were up 0.3 percent last month after a hefty 0.6 percent increase a month earlier. Income and spending were in line with Wall Street economists' forecasts and may have been affected by disruptions stemming from damaging hurricanes that hit Southeastern states in late summer and fall. Continued ...
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