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US new home sales dropped in September as the government’s tax credit for 1st time home buyers is about to expire, according to official data released on Wednesday. The Commerce Department said sales decreased 3.6% to a seasonally adjusted annual rate of 402,000 from the downwardly revised 417,000 in August, and slumped 7.8% from a year ago. The September data were much lower than most economists’ forecast of 440,000 units. It was also the 1st decline since March. The median sales price in September was down 9.1% to US$204,800 from US$225,200 in Y 2008. Analysts said the housing market remained fragile, with the country’s unemployment rate staying high and consumers reluctant to spend. With the US$8,000 tax credit program for 1st time home buyers set to expire on Nov. 30, home builders and economists are worried that house selling will plunge after the deadline, further hurting the fragile real-estate market. The US Congress is considering extending the tax credit through March 2010 and gradually phasing it out over the rest of next year. It is widely expected that the tax credit will be extended by the Congress.

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Home sales and orders for durable goods are likely to have risen in August, extending gains that have signaled the US is emerging from the worst recession since the 1930s, economists said before reports this week. Purchases of new and existing houses climbed to a combined 5.79M annual pace last month, the most in almost two years. Bookings for durable goods likely rose 0.4%, the fourth advance in five months. Housing and manufacturing, two areas that deepened the slump, are stabilizing as stimulus measures such as credits to first-time home buyers and “cash for clunkers” revive demand. While acknowledging the economy is healing, analysts project Ben Bernanke and his colleagues at the Federal Reserve will commit to keeping interest rates low when they meet this week. Read more

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New home sales in the USA rose last month at the fastest rate since 2005, the US Commerce Department said yesterday in a report, highlighting the case that the hammered US residential real estate market is staging a recovery. Separately, official figures showed that new orders for durable goods tallied up their biggest jump in 2 years in July, as aircraft purchases soared and the US Cash-for-Clunkers program fueled a big rise in demand for automobiles. Sales of new homes jumped by 9.6% to an adjusted annual rate of 433,000 in July. The 4th consecutive monthly rise beat even the most bullish forecasts of Wall Street analysts and exceeded the revised June jump of 9.1%. New home sales are still off by 13.4% compared with the same month a year ago. Buyers are responding to low prices and the popular 1st time home buyer tax credit which has succeeded in luring people back to the market. The median price of a new home slipped a bit to US$210,100 in July and is off by 11.5% year-on-year.

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This is what happened last week…

Last Tuesday began what the world community views as a major event in US history, the inauguration of Barack H. Obama as its 44th President and its 1st Black American President.
Some of President Obama’s executive orders on his 1st day in office:

1. A freeze on salaries for White House staff earning $100,000 or more, about 100 people in all.

2. New Freedom of Information Act rules, making it harder to keep the workings of government secret.

3. Tighter ethics rules governing when administration officials can work on issues on which they previously lobbied governmental agencies, and banning them from lobbying the Obama administration after leaving government service.

The week in the markets, however, continued to be bathed in the glow of uncertainty within the financial sector and coupled with Qs about the timing of the economic recovery.
Couple that with headlines announcing that China’s Y 2008 Q 4 GDP contracted from 9% to 6.8%, the UK reporting a GDP decline of 1.5%, the largest since 1980, US housing starts fell to their lowest level on record, and initial jobless claims returned to Christmas levels, matching the 26 yr. high of 589,000 set in December 2008.
Though Microsoft disappointed, IBM and AAPL rang the bell with GOOG beating too, and coming in better than expected.
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