US durable goods orders slump most in 3 years

Orders for US durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.

Bookings for goods meant to last at least three years slumped four per cent, more than forecast, after a revised 3.2 per cent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a one per cent decline, according to the median forecast in a Bloomberg News survey.

The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009.

“The expected weakness may not last, as the weak start to the quarter has tended to give way to a stronger end over the last two and a half years since the recession ended,” Jonathan Basile, a senior economist at Credit Suisse in New York, said in an email.

Home prices in 20 US cities decline 4%
Home prices in 20 US cities dropped more than forecast in December to the lowest level since the housing crisis began in mid-2006, indicating foreclosures are hampering the industry’s recovery. The S&P/Case-Shiller index of property values in 20 cities fell four per cent from a year earlier, after decreasing 3.9 per cent in November, a report from the group showed on Tuesday in New York. The median forecast of 31 economists surveyed by Bloomberg News called for a 3.7 per cent decline.

Distressed properties returning to the market mean prices will stay depressed, prompting buyers to wait for cheaper bargains and impeding construction.