Saturday, April 08, 2006

U.S. New Home Sales to Hold Steady

The January new home sales report scheduled to release at 10 a.m. in Washington will probably hold steady as mild weather brought more buyers into the market, economists said.

"January new home sales are expected to decline to a 1.26 million-unit pace, following a 2.9% rise in December," said Mike Carey, currency strategist at Calyon. "Despite the expected bounce in January sales, we maintain a negative outlook on housing activity this year," he added.

Higher prices and borrowing costs are likely to reduce sales this year and curb economic growth. But this was masked by the warmest January on record, which probably stimulated home sales during a month that's generally slow.

According to Piet Lammens, economist at KBC Bank, "a higher-than-expected outcome wouldn’t be an indication of renewed strength in the housing market. Underlying housing activity is slowing down."


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