What to watch: Focus turns to new-home sales
A trader on the floor of the New York Stock Exchange on Thursday.(Photo: John Moore, Getty Images)
It's not home-selling season yet, but Wall Street will be looking hard at Friday's new-home sales numbers.
The National Association of Realtors announced Tuesday that existing home sales rose 9.2% from 2011. High Frequency Economics expects new-home sales in December will hit 400,000 on a seasonally adjusted basis, vs. a consensus of 385,000.
HFE thinks home sales will beat expectations in part because they have lagged behind other indicators, such as housing starts. And, while it's hard to remember as much of the country shivers, December was warmer than average, which helps sales.
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Why the focus on new homes? Because they require considerable labor to construct, which is good for the economy and the hard-hit construction sector. Rising new-home sales also mean more work for people in the raw materials and manufacturing sectors: It takes a heap of plumbing to make a house a home.
The stimulus doesn't end when the for-sale sign comes down. People who buy a new home then buy stuff for it, which is good news for companies such as Home Depot and Toro.
Housing has seen a slow recovery, pushed by low mortgage rates. The average 30-year, fixed-rate mortgage is 3.42%. The principal and interest payment on a $150,000 home loan is just $667, says Bankrate.com.
But low rates won't do you any good unless you have a steady job, and that's one thing that's still in short supply. Until unemployment falls and wages rise, new home starts will still be sluggish.
References
- ^ https://portfoliotracker.usatoday.com/?uref=whattowatch/ (portfoliotracker.usatoday.com)