Short of expectations: New U.S. home sales posted a tepid 0.7% increase in August, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative. The Commerce Department says sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000. While it was the fifth straight increase and the strongest report in 11 months, sales were down 4.3% from the same month last year. The median sales price of $195,200 was off 11.7% from $221,000 from a year earlier, and 9.5% below July’s level of $215,600.
Lending still needs help: Federal Reserve Chairman Ben Bernanke says a government program intended to spark lending to consumers and businesses is still necessary even with other emergency lending programs winding down as the economy recovers. Bernanke says, “an ongoing need still clearly exists” for the Term Asset-Backed Securities Loan Facility, which is also aimed at ensuring loans flow to the troubled commercial real estate market. Investors use the money to buy securities backed by auto and student loans, credit cards, business equipment and other things. The TALF goes to the heart of efforts by the Fed and Obama administration to get credit flowing more normally again, a key ingredient to a lasting economic recovery. Originally set to expire this year, the Fed in August extended the program into 2010.
Slow recovery: Orders for goods expected to last at least three years fell unexpectedly in August due mainly to a drop in demand for commercial aircraft. The worst reading since January for durable goods is evidence that any recovery in manufacturing will be slow and gradual. Economists were disappointed with the report, which followed similarly weaker-than-expected data on existing home sales, but most said it reflected the uneven nature of the economy as it transitions out of the worst recession since the 1930s. The Commerce Department says orders for durable goods dropped 2.4% in August, after increasing to a revised 4.8% in July. Wall Street economists expected a 0.5% increase, according to a survey by Thomson Reuters. It was the second drop in three months.
