WASHINGTON (Reuters) - U.S. home resales unexpectedly rose in January, reaching a six-month high, in the latest sign that the economy remains on firmer ground despite slowing global growth and tightening financial market conditions.
The housing market strength was echoed by other data on Tuesday showing a solid rise in house prices in the year to December. But the economic outlook was tempered by a fall in consumer confidence this month amid a stock market sell-off.
"Good news on the housing front offset the decline in consumer confidence. With financial markets steadying over the last couple of weeks, and talk about 'recession' quieting a bit, confidence should retrace some of February's losses," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. The National Association of Realtors said existing home sales increased 0.4 percent to an annual rate of 5.47 million units, the highest level since July. Last month's sales pace was also the second highest since 2007.
Sales rose strongly in the U.S. Northeast, despite a massive snowstorm in late January, and were also up in the Midwest. Economists had forecast home resales decreasing 2.9 percent to a pace of 5.32 million units last month.
Home resales were up 11 percent from a year ago, the largest year-on-year gain since July 2013.
A separate report showed the S&P/Case Shiller composite index of 20 metropolitan areas rose 5.7 percent in December on a year-over-year basis, matching the increase in the previous month.
Prices rose 0.8 percent in December from November on a seasonally adjusted basis.
The housing reports added to retail sales, industrial production and employment data in suggesting that the economy regained some momentum after slowing to a crawl in the fourth quarter.
The steady flow of fairly upbeat data should ease concerns about the economy. Worries of a recession and relentless declines in oil prices triggered the recent wave of selling on global equity markets, causing financial market conditions to tighten.
The sell-off hurt consumer sentiment this month, a third report showed. The Conference Board Consumer said its consumer confidence index fell to 92.2 from a reading of 97.8 in January.
Households' short-term outlook grew more pessimistic this month, with consumers apprehensive about business conditions, their personal financial situation, and to a lesser degree, labor market prospects, the Conference Board said.
U.S. financial markets were little moved by the mixed data as investors focused on oil prices.
Stocks on Wall Street fell, with shares in Toll Brothers Inc <TOL.N>, the largest U.S. luxury homebuilder, dipping despite reporting a surge in quarterly revenue.
The dollar rose against the euro after weak German data, while prices for U.S. Treasury debt fell.
LACK OF PROPERTIES
The housing sector continues to be supported by a tightening labor market, which is starting to push up wage growth, boosting household formation. First-time buyers accounted for 32 percent of existing home sales in January, an increase from 28 percent during the same period last year.
Though residential construction only accounts for a small share of gross domestic product, housing has a broader reach in the economy, which should help to sustain growth.
Despite the strength in housing, a lack of properties available for sale remains a challenge. The number of unsold homes on the market rose 3.4 percent to 1.82 million units in January from December, but was down 2.2 percent from a year ago.
At January's sales pace, it would take 4.0 months to clear the stock of houses on the market, up from 3.9 months in December. A six-month supply is viewed as a healthy balance between supply and demand.
(Reporting by Lucia Mutikani; Editing by Paul Simao)