Housing figures point to US recession
Fears of a recession in the US are building with the latest new home sales figures showing a 27 per cent drop over 2007. The chances of the US Federal Reserve cutting interest rates once again increased after new home sales in December fell by 4.7 per cent. The annualised sales figure of 604,000 is the worst result since 1995. If as expected the Fed announces a 50 basis point rate cut on Thursday, there will be further downward pressure on the US dollar with rates at 3 per cent compared with 4 per cent in the euro zone. The median price for a new home tumbled 10.9 per cent in December to $US219,200 ($249,000) and builders have been dumping landholdings and shelving building projects. At the same time home foreclosures in the US increased by 75 per cent over the last year.
By The Australian Financial Review