By  on September 25, 2009

An unexpected dip in home sales broke a promising four-month trend in a vital sector of the economy, depressing markets and helping to push retail stocks down 0.7 percent Thursday.

August sales of existing homes fell 2.7 percent from July to a seasonally adjusted annual rate of 5.1 million units, according to the National Association of Realtors. Sales had risen 15.2 percent during the preceding four months.

Economists, who were projecting an increase in home sales, see a turnaround in the housing market as a major component to lasting economic recovery. The bursting of the housing bubble, which was inflated by lending standards now generally viewed as lax, sparked the recession and contributed to the financial crisis.

“When home prices show sustained gains, credit will become more widely available to other sectors because Wall Street will be able to price risks confidently,” said Lawrence Yun, chief economist at the real estate trade group. “Stable home values will also allow more families to purchase consumer products and provide a strong boost for the broader economy.”

Investors looked past even a welcomed reduction in the number of new claims for unemployment last week and pushed the S&P Retail Index down 2.81 points to 377.84, and the Dow Jones Industrial Average down 0.4 percent, or 41.11 points, to 9,707.44.

The Labor Department said initial claims for unemployment insurance fell by 21,000 last week to a seasonally adjusted 530,000.

Retail stocks on the wane Thursday included Charming Shoppes Inc., down 4.5 percent to $4.87; AnnTaylor Stores Corp., 4.4 percent to $15.56; Chico’s FAS Inc., 3.6 percent to $12.72; Saks Inc., 3.5 percent to $6.94, and Macy’s Inc., 2.3 percent to $18.01.

Among the vendors posting declines were Liz Claiborne Inc., down 8.8 percent to $5.31; G-III Apparel Group, 3.9 percent to $13.56, and Polo Ralph Lauren Corp., 2.8 percent to $73.51.

To access this article, click here to subscribe or to log in.

load comments
blog comments powered by Disqus