Accessibility links

Weak US Housing Numbers Reported

<!-- IMAGE -->

Weak U.S. housing data is tempering enthusiasm stoked by upbeat earnings reports from some of America's best-known corporations.

From technology giant Apple to construction-equipment maker Caterpillar, a flurry of corporate heavyweights have topped earnings and profit expectations for the third quarter of the year, turning in strong performances in one of the toughest global economic climates in decades.

The earnings reports would seem to validate an upward march by stock markets in the United States, where the Dow Jones Industrial Average recently topped 10,000 for the first time in a year.

But economic soft spots remain, including America's beleaguered housing sector. It was a rash of mortgage defaults that helped precipitate last year's financial meltdown and sent an already-weakened U.S. economy deeper into recession. In addition to continued high home foreclosure rates, applications for home-building permits fell in September by the largest amount in five months.

Drops in permit applications usually forecast a slowdown in home construction.

Channel Capital Research Institute Chief Investment Strategist Douglas Roberts says America's housing sector will likely remain weak well into next year.

"I do not think it is going to be an engine of growth like it was before," he said. "I think right now it is like we are scraping along the bottom [of the U.S. housing market], and I think you could have weak numbers in this area for a while."

The U.S. Commerce Department says new home construction edged up .5 percent in September, less than many economists had anticipated.

And what of a U.S. stock market that has seen the Dow rise by 50 percent since March?

New York-based equity strategist Peter Boockvar says sustaining the rally will become more challenging, even if corporate earnings continue to beat estimates.

"Going into the second quarter, expectations were very low," he said. "We beat those. Now we have greater expectations. We are getting those fulfilled, but the market is only up 2 to 3 percent [in recent days]. I think we have priced in a lot of these good numbers and that is why the market is showing signs of getting tired here."

Boockvar spoke on Bloomberg television.

The Labor Department reports that U.S. wholesale prices fell .6 percent last month due primarily to falling energy prices. During the past year, core wholesale prices have risen a modest 1.8 percent, a sign that U.S. inflation remains in check.