New-homes sales soar; orders for many big-ticket items up

Associated Press WriterWASHINGTON (AP) -- New-home sales soared, orders for many big-ticket items posted gains and consumer confidence rebounded, a trio of reports showed Friday. The reports raised hope that better days may be ahead for the ailing economy.

New-homes sales soared by 6.4 percent in November, the largest increase in almost a year, helped out by mild weather and low mortgage rates, the Commerce Department said.

Although a big drop in demand for military planes pushed down orders for costly manufactured goods last month, many other big-ticket items posted gains, another report by the department showed.

But in the most encouraging economic news of the day, consumer confidence rose sharply in December following three months of dramatic decline, as the erosion of the economy and job market appeared to begin leveling off.

The New York-based Conference Board said its Consumer Confidence Index rose to 93.7 this month from a revised 84.9 in November. Analysts were expecting a reading of 83.

The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.

All three reports raised hopes that the recession, which started in March, may be bottoming out.

The increase in new-home sales followed a 1.7 percent advance in October and came despite rising unemployment and sagging consumer confidence. The housing market, one of the economy's few bright spots, has remained stable during the more than yearlong economic slowdown, largely because of low interest rates.

Meanwhile, orders to U.S. factories for durable goods -- items expected to last at least three years -- fell by 4.8 percent in November, after shooting up by 12.5 percent in October.

But virtually all the weakness in November came from a 57.9 percent drop in new orders for airplanes, mostly stemming from slackened demand for defense aircraft and parts, the government said.

Excluding the volatile transportation category, which can swing widely from month to month, durable-goods orders rose a solid 1.1 percent, the first back-to-back increase since November-December 1999.

New orders for automobiles rose a strong 4.5 percent in November, on top of an 11 percent increase in October. Free financing for cars and trucks has resulted in stronger sales in the last couple of months.

Orders for computers and electronic equipment grew by 2 percent, following an 8.9 percent advance in October. Demand for computers and semiconductors rose, while orders for communications equipment dipped.

Electrical equipment and household appliances saw orders increase by 2.6 percent in November, after a 4.5 percent gain. Orders for primary metals, including steels, rose 1.4 percent, following a 2 percent decline.

Shipments, a good barometer of current demand, edged up by 0.2 percent in November, led by a big jump in shipments for automobiles and car parts. In October, shipments rose 3.4 percent.

The nation's manufacturing sector has been hardest hit by the sour economy, which tipped into recession in March. To cope, factories have sharply cut production and laid off workers.

In the housing report, the 6.4 percent rise, the biggest increase since December 2000, pushed new-home sales to a seasonally adjusted annual rate of 934,000, the highest level in eight months.

By region, sales rose by 6.1 percent in the Northeast to a rate of 70,000. In the Midwest they jumped by 13.1 percent to a rate of 173,000 and in the South, they grew by 7.7 percent to a rate of 478,000. But in the West, sales fell by 0.9 percent to a rate of 213,000.

Economists say mild weather and low mortgage rates helped sales last month. The average interest rate on a 30-year fixed rate mortgage was 6.7 percent in November, compared with 7.7 percent for the same month a year ago.

In another report, new claims for unemployment insurance rose last week by a seasonally adjusted 7,000 to 392,000, the Labor Department reported.