The housing sector has gone from problem child to the economy's star pupil. Housing is the focus of this week's compressed schedule of economic reports. New data takes a holiday today. The Martin Luther King Jr. Day holiday comes on the same day as the inauguration celebrating the second term of President Barack Obama. It is a holiday for U.S. stock markets and the federal government.
Tuesday brings the existing home sales report from the National Association of Realtors. The previous month's reading stood at the highest level in three years. That's followed Friday by the new home sales report from the Commerce Department. Both of these forthcoming reports cover December.
Robert Brusca, chief economist for Fact and Opinion Economics, looks for gains in both December home sales reports. "The housing sector is starting to take root," he says. "Early indicators are that the sector is continuing its push as 2012 draws to a close. Two reports are important to gauging that trend: new and existing home sales reports. Look not just at activity but at the year-over-year price action. One key factor to keeping the sector's expansion in gear is that prices continue to climb, making it a safe place to invest."
Brusca's forecast calls for existing home sales to come in at an annual rate of 5.11 million, up from November's rate of 5.04 million. For new home sales, he's looking for a rise to an annual rate of 392,000, compared to 377,000 in the previous month.
Could new home sales be a source of even better news this year? Stuart Hoffman, chief economist for The PNC Financial Services Group, has a positive view. He says what's really happening with new home sales hasn't recently been captured in the federal government's reports. He calls it a data problem. Hoffman says there could be upward revisions in new home sales issued in the coming months.
Jeffrey Rosen, chief economist for Briefing.com, tells Bankrate that he, too, has an upbeat outlook for new home sales in coming months. He says the recipe is right because there's a relatively low supply of new homes, combined with increasing demand.
Also on this front, the Commerce Department reported that housing starts were up 12 percent in December, compared to November. In addition, new home construction was up 37 percent from December 2011.
Builder sentiment has recently held steady. The National Association of Home Builders reported its January index was unchanged in January at 47. Sentiment had risen for eight straight months.
Another report to watch, due Thursday, is the index of leading economic indicators from The Conference Board. This forward-looking gauge doesn't tend to be a mover of financial markets unless it is wildly different from expectations. The December reading flashed a "down" arrow, declining 0.2 percent. Also Thursday, new claims for unemployment benefits are on tap from the Labor Department. The previous weekly update included a substantial decline to a five-year low. That suggests that the job market was looking better, but new claims are notoriously volatile.