January 27, 2009—New residential construction posted another hefty loss in December, but existing home sales increased. The Conference Board's Leading Indicators Index increased in December.

New Residential Construction
Housing starts were off 15.5% in December to 550,000 units, following a 15.1% decrease in November. Permits for new housing also fell in December, down 11%. Compared to December of 2007, housing starts were down 45.0%. Despite low mortgage rates, there is little demand for housing because of continuing problems in financial markets, declines in household wealth, and a soft labor market.

Existing Home Sales
Existing home sales unexpectedly surged 6.5% month over month in December, following a 9.4% plunge in November, according to the National Association of Realtors. December's increase is the largest since 2002. Available inventory remained high at 9.3 months, though it did decrease from November's reading of 11 .2 months. The median price for a home fell from $181,300 to $175,400. Low prices could continue to entice hesitant buyers back into the market. For all of 2008, existing home sales declined by 13%. Even with December's positive news, the housing market remains in turmoil.

Conference Board's Leading Indicators Index
The Conference Board's Index of Leading Indicators increased a surprising 0.3% in December, after falling 0.4% in November. The index was propped up by an increase in the money supply. The largest drags on growth were fewer building permits, a decrease in average hours worked, a drop in supplier deliveries, and a rise in initial unemployment claims. Even with December's gain, the economy remains in a deep recession, and subsequent reports will probably post declines.