Economy Watch: New Home Sales Rise in November

By Dees Stribling, Contributing Editor

The Census Bureau reported on Thursday that the rate of new home sales was an annualized rate of 377,000 units in November, up from 361,000 in October. The November 2012 rate is 4.4 percent higher than in October and 15.3 percent higher than the same month a year ago.

At that rate, total new home sales for all of 2012 are on track to be up by 18 percent compared with 2011. Even so, that total would be the third-lowest one since the federal government started tracking the new home sales during the Kennedy administration. The two worst years for new-home sales are 2010 and ’11, but even 2009 would beat 2012 if new home sales stay at the current pace, since there were 375,000 homes sold in ’09, helped along by the homebuyer tax credit.

The bureau also report that the inventory of unsold homes at the end of November was 149,000, just a shade higher than the all-time low. That number of units represents a supply of 4.7 months at the current rate of sales.

Consumer confidence takes a dive

The Conference Board said on Thursday that its Consumer Confidence Index, which had declined slightly in November, posted a sharper decrease in December. The Index now stands at 65.1, down from 71.5 in November (the upbeat year 1985 = 100).

Consumers are also apprehensive about the months ahead. The Expectations Index declined sharply to 66.5 this month from 80.9 last month, which is probably a reflection of rising worries about the fiscal cliff. On the other hand, consumers are still more sanguine about the here and now. The board’s Present Situation Index increased to 62.8 in December from 57.4 last month.

“The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff,” Lynn Franco, director of economic indicators at the Conference Board, posited in a press statement. “A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions. While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions.”

Weekly unemployment claims drop

According to the U.S. Department of Labor on Thursday, initial unemployment claims for the week ending Dec. 22 were 350,000, a decrease of 12,000 from the previous week’s revised figure of 362,000. The four-week moving average was 356,750, a decrease of 11,250 from the previous week’s revised average of 368,000.

Wall Street seemed upset by remarks by Senate Majority Leader Harry Reid on Thursday to the effect that no solution was in sight for the fiscal cliff, but then rebounded somewhat when the House of Representatives announced it was convening on Sunday. The Dow Jones Industrial Average lost 18.28 points, or 0.14 percent, while the S&P 500 was down 0.12 percent and the Nasdaq declined 0.14 percent.