Purchases of new U.S. homes unexpectedly jumped in July to the highest level in almost nine years, led by soaring demand in the nation’s south and adding to signs of persistent housing-market strength.
Sales increased 12.4 percent to a 654,000 annualized pace, the fastest since October 2007, Commerce Department data showed Tuesday in Washington. That exceeded the most optimistic forecast in a Bloomberg survey. Purchases in the South were the strongest since before the start of the last recession.
Employment gains and historically low borrowing costs are providing firm support for housing demand, helping reduce inventory, which will probably keep new construction elevated. The report showed an increase in the share of homes sold for less than $300,000, indicating builders are turning their sights to entry-level buyers.
The number of regional Federal Reserve banks calling on the central bank to raise the rate it charges commercial banks for emergency loans rose to eight in July, minutes from the Fed's discount rate meeting released on Tuesday showed.
That compared to six in June, showing growing confidence among Fed policymakers in the U.S. economic outlook.
The Federal Reserve banks of Kansas City, Richmond, Cleveland, San Francisco, Boston and St. Louis renewed their push for an increase and were joined this time around by Philadelphia and Dallas.
Those that wanted an increase cited "actual and expected strengthening in economic activity and their expectations for inflation to gradually move toward the 2 percent objective."
The Fed decided to hold the discount rate steady at 1 percent and policymakers agreed to keep the main benchmark interest rate unchanged at the subsequent policy meeting on July 26-27.
Oil prices rose on Tuesday after Reuters reported Iran was sending positive signals that it may support joint OPEC action to prop up the market, before the market pared gains on trade data showing a surprise build in U.S. crude stocks.
Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, refused to join a previous attempt this year by the group and non-OPEC members led by Russia to stabilize production. But sources in OPEC and the oil industry told Reuters that Tehran appeared more willing to support such talks scheduled next month in Algeria.
"Iran is reaching its pre-sanctions production level soon and after that it can cooperate with the others," said a source familiar with Iranian thinking after a visit by Venezuelan Oil Minister Eulogio Del Pino to Tehran as part of a tour to convince OPEC of a production freeze.
Brent crude settled up 80 cents, or 1.6 percent, at $49.96 a barrel, while U.S. West Texas Intermediate (WTI) crude rose69 cents, or 1.5 percent, to close at $48.10.
Still, Brent and WTIpared gains in post-settlement trade after the American Petroleum Institute (API) reported that U.S. crude inventories rose by 4.5 million barrels last week, a surprising build versus analyst expectations' for a draw of 500,000 barrels. The U.S. government will issue official inventory data on Wednesday. [EIA/S]
Reference: Reuters, Bloomberg
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