* U.S. existing home sales drop 1 percent in December
* Richmond Fed factory index falls to minus 12
By Jason Lange
WASHINGTON, Jan 22 U.S. home resales
unexpectedly fell in December, but the drop was not large enough
to suggest the recovery in the housing sector is running out of
The National Association of Realtors said on Tuesday that
existing home sales dropped 1 percent last month to a seasonally
adjusted annual rate of 4.94 million units.
That was still the second-highest rate of sales since
November 2009, when sales were lifted by a federal tax credit
for home buyers, and the data pointed to momentum in the housing
"The outlook for housing is better this year than last
year," said Patrick Newport, an economist at IHS Global Insight
in Lexington, Massachusetts.
The U.S. housing market tanked on the eve of the 2007-09
recession and has yet to fully recover, but steady job creation
helped the housing sector last year, when it likely added to
economic growth for the first time since 2005.
This year, housing is expected to be one of the economy's
brighter spots, helping counteract some of the drag on economic
growth from higher taxes that kicked in this month.
Still, the housing sector remains a shadow of its former
self and many Americans are holding back from putting homes on
the market because they owe more on their mortgages than their
homes are worth.
The tight supply appears to be pushing housing prices
higher, which could prove worrisome if prices rise at a faster
pace than incomes, shutting buyers out of the market.
"There is still reason for caution with the housing sector,"
said Gary Shilling, an economic consultant in Springfield, New
In December, the inventory of existing homes for sale fell
8.5 percent from November to 1.82 million, the lowest since
January 2001. At the current pace of sales of existing homes,
inventories would be exhausted in 4.4 months, the lowest rate
since May 2005.
Nationwide, the median price for a home resale was $180,800
in December, up 11.5 percent from a year earlier.
A rise in home building could help meet growing demand in
the broader market for homes this year. The government said last
week groundbreaking on new homes increased in December.
The softer pace of resales was below the median forecast in
a Reuters poll for a 5.1-million-unit gain. U.S. Treasuries
pared price losses and stock prices were
Distressed home sales fell to 24 percent of total sales in
December from 32 percent a year ago.
The share of distressed sales, which also include those
where the sales price was below the amount owed on the home, was
up from 22 percent in November.
A separate report showed factory activity in parts of the
U.S. mid-Atlantic and South contracted in January, with the
Richmond Federal Reserve bank's index of activity dropping to
minus 12 from 5 in December.