US housing upswing likely short-lived - ACC

24 October 2008 20:43  [Source: ICIS news]

The US housing slump will likely continueTORONTO (ICIS news)--The upswing in US housing in September, with existing home sales stronger than expected, is likely to be short-lived, the American Chemistry Council said on Friday.

 

Housing is an important chemical end market, in that each house has an average of $16,000 (€12,480) worth of chemistry, the ACC said.

 

The US National Association of Realtors reported existing home sales up 5.5% in September from August despite the unravelling of credit markets in mid-September, as buyers responded to improved housing affordability conditions.

 

Compared with a year ago, existing home sales were up 1.4% in September.

 

However, the ACC’s economists pointed out that this upswing was prior to the drastic deterioration in the credit and financial markets that accelerated in October. The meltdown made it likely that home sales would be very weak in the fourth quarter.

 

Prices of existing homes continued to decline, falling 5.7% from August and were off 9.0% year-on-year, the economists said in their analysis.

 

The average price of an existing home fell to $191,600, and US home prices were now back to their August 2004 levels, economists said.

 

Overall, economic indicators were signalling that the world’s largest economy was unlikely to improve in the near term.

 

While the decline in oil prices should ease recessionary pressures, forecasters surveyed by the ACC were skeptical about the US economy and had revised their predictions for 2009 significantly downward, the trade group said.

 

“Indeed, the decline in equity markets now more reflects the fundamentals behind a global recession,” the ACC said.

 

Overseas, China’s economic growth was easing to a 9.0% year-on-year pace.

 

With softening growth in the US and other developed nations, further slowing was inevitable and a global recession was likely.

 

In the chemicals industry, the latest figures indicated flat global activity in September following generally soft activity since January.

 

In the US, chemical production fell in all regions during September as weaker economic growth and severe disruptions caused by hurricanes Gustav and Ike impacted the industry.

 

This softness was confirmed by the most recent chemical railcar loading figures, the ACC said.

 

The ACC’s 13-week average to measure railcar loadings trends was now off 2.5% year-on-year, it said.

 

($1 = €0.78)

 

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By: Stefan Baumgarten
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