On a positive note, cheaper gas and job creation set the tone in December, as consumer confidence rebounded after declining in November. The Conference Board’s Consumer Confidence Index rose modestly, “propelled by a considerably more favorable assessment of current economic and labor market conditions”. The December reading is just below the post-recession high reached in October.
Also on the upside, contracts to purchase previously owned homes rose .8% in November after declining 1.2% in October. According to the National Association of Realtors: “The consistent economic growth and steady hiring we’ve seen the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end. With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers to enter the market in upcoming months.”
On a less positive note, construction spending fell in November for the first time since June, dragged down by a decline in spending on government projects. Spending fell .3% to an annual pace of $975 billion; while spending on residential projects increased .9%, public construction spending dropped 1.7%.
Also in downbeat news, the factory sector saw a bit of a chill at the end of the year, growing in December at the slowest pace in six months. The ISM index of factory activity fell as its gauge of new orders declined to the weakest in seven months, while measures of production and order backlogs also fell.
Home price growth continued to decelerate in October, with the S&P/Case-Schiller 20-City Home Price Index slowing to a 4.5% gain on yearly basis – the smallest in two years. Smaller increases in home values will put homes within reach for more Americans.