WASHINGTON (Reuters) - U.S. home resales unexpectedly rose in January, reaching a six-month high, in the latest sign that the economy remains on firmer ground despite slowing global growth and tightening financial market conditions.
The housing market strength was echoed by other data on Tuesday showing a solid rise in house prices in the year to December. But the economic outlook was tempered by a fall in consumer confidence this month amid a stock market rout.
“The housing recovery continues, but the sharp drop in consumer confidence could be a sign that consumers are becoming anxious about their economic plight as the fallout from global growth concerns filters through to Main Street,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
The National Association of Realtors said existing home sales increased 0.4 percent to an annual rate of 5.47 million units, the highest level since July. January’s sales pace was also the second highest since 2007.
Sales rose strongly in the U.S. Northeast, despite a massive snowstorm in late January, and were also up in the Midwest. They were unchanged in the South and fell 4.1 percent in the West, likely reflecting tight inventories and hefty home price gains.
Economists had forecast home resales decreasing 2.9 percent to a pace of 5.32 million units last month. Existing home sales were up 11 percent from a year ago, the largest year-on-year gain since July 2013.
A separate report showed the S&P/Case Shiller composite index of 20 metropolitan areas rose 5.7 percent in December on a year-over-year basis, with some of the biggest gains coming from cities in the West. Prices rose 0.8 percent in December from November on a seasonally adjusted basis.
“These are solid growth numbers that continue to tell a story of a very healthy market coming into the important spring season. Not too hot, not too cold, just right,” said Stephen Phillips, president at Berkshire Hathaway HomeServices in Irvine, California.
The housing reports added to retail sales, industrial production and employment data in suggesting the economy regained some momentum after slowing to a crawl in the fourth quarter.
Economists raised their first-quarter gross domestic product estimates by at least one-tenth of a percentage point to as high as a 2.4 percent annual pace after the existing home sales data. The economy grew at a 0.7 percent rate in the fourth quarter.
Worries of a recession and relentless declines in oil prices triggered the recent wave of selling on global equity markets, causing financial market conditions to tighten.
The sell-off hurt consumer sentiment this month, a third report showed. The Conference Board said its consumer confidence index fell to a six-month low of 92.2 from a reading of 97.8 in January.
Households’ short-term outlook grew more pessimistic this month, with consumers apprehensive about business conditions, their personal financial situation and, to a lesser degree, labor market prospects, the Conference Board said.
U.S. financial markets were little moved by the mixed data as investors focused on renewed weakness in oil prices. Stocks on Wall Street fell, but shares in Toll Brothers Inc (TOL.N), the largest U.S. luxury homebuilder, jumped 3.6 percent after it reported a surge in quarterly revenue.
The dollar .DXY was largely unchanged against a basket of currencies, while prices for U.S. Treasury debt were trading higher.
Housing continues to be supported by a tightening labor market, which is starting to push up wage growth, boosting household formation. First-time buyers accounted for 32 percent of existing home sales in January, an increase from 28 percent in the same month last year.
Though residential construction only accounts for a small share of GDP, housing has a broader reach in the economy, which should help to sustain growth.
But a lack of properties available for sale remains a challenge. The number of unsold homes on the market rose 3.4 percent to 1.82 million units in January from December, but was down 2.2 percent from a year ago.
At January’s sales pace, it would take 4.0 months to clear the stock of houses on the market, up from 3.9 months in December, but down from 4.5 months in January 2015.
A six-month supply is viewed as a healthy balance between supply and demand.
Reporting by Lucia Mutikani, Additional reporting by Chuck Mikolajczak in New York; Editing by Paul Simao