Home prices rose 8.1 percent in January, the fastest annual rate since the peak of the housing boom in summer 2006. Demand for longer-lasting factory goods increased 5.7 percent in February, the biggest gain in five months.
February sales of new homes and March consumer confidence looked shakier. But the overall picture reflected an improving economy.
“There is nothing in this data that says the economy is falling back,” said Joel Naroff, chief economist at Naroff Economic Advisors.
The year-over-year increase in home prices reported by the Standard Poor’s/Case-Shiller 20-city index was the fastest since June 2006. Prices rose in all 20 cities and eight markets posted double-digit increases, including some of those hardest hit during the crisis. Prices rose 23.2 percent in Phoenix, 17.5 percent in San Francisco and 15.3 percent in Las Vegas.
The strength in home prices has far from erased the damage from the crisis. Home prices nationwide are still on average 29 percent below the peak reached in August 2006.
Sales of new homes cooled in February to a seasonally adjusted annual rate of 411,000, the Commerce Department reported Tuesday. That is down from January’s pace of 431,000, which was the fastest since September 2008. But February’s pace was still better than every other month since April 2010, when a temporary home-buying tax credit was lifting sales. And February sales were 12.3 percent higher than a year earlier.
“We are still far from the healthy level of 700,000, but we’re slowly making our way in that direction,” said Jennifer Lee, senior economist with BMO Capital Markets. “We just have to accept the fact that the path will be interrupted once in a while, and that’s what happened in February.”
Manufacturing is also pushing the economy this year, and factories were busier in February, the Commerce Department’s report on durable goods orders said.
The increase in February was caused by a surge in commercial aircraft orders, which tend to be volatile. Still, orders for motor vehicles and parts increased solidly, suggesting demand for cars and trucks remains strong.
Orders for machinery and other goods that signal business investment plans fell sharply in February. But the decline followed the biggest monthly gain in nearly three years. Economists had expected companies to ease up after their spending spree in January. When looking at the two months together, business investment has accelerated from the end of 2012.
“The picture of business spending to start the year is fairly healthy,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.
But tax increases and government spending cuts could slow the economy’s momentum. Both weighed on consumers’ minds in March.
The Conference Board, a private research group, said its Consumer Confidence Index fell to 59.7 this month, down from 68 in February. The decline was mainly a result of a drop in expectations for the economy in the next six months, though consumers also were more pessimistic about current economic conditions.
The survey was conducted from March 1 through March 14, as $85 billion in automatic spending cuts began. Consumers were already feeling pinched by higher Social Security taxes that have reduced take-home pay for most workers this year. And gasoline prices rose sharply in February, then eased slightly this month.
“It was sort of a perfect storm,” said Chris G. Christopher Jr., director of consumer economics at IHS Global Insight. “I do expect confidence to rebound as long as there is no government shutdown and the political bickering in Washington doesn’t reach a fever pitch.”
Article source: http://www.nytimes.com/2013/03/27/business/economy/orders-for-durable-goods-jump.html?partner=rss&emc=rss
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