Business in brief: Buyers scarce for new homes

Washington – Sales of new homes fell unexpectedly in December, capping the industry’s worst year on record and fueling concern that the housing market turnaround could falter.

Nationwide, new home sales for December fell 7.6 percent to a seasonally adjusted annual rate of 342,000 from an upwardly revised November pace of 370,000, the Commerce Department said Wednesday.

“Another wheezing home sales report,” wrote JPMorgan Chase economist Michael Feroli.

Last month’s results were the weakest since March and were only 4 percent above the bottom last January.

Associated Press

Fed says rates will remain low

Washington – The Federal Reserve pledged Wednesday to hold rates at record lows to nurture the economic recovery and lower unemployment.

The Fed’s statement sketched a mixed picture of the economy. Pointing to weakness, it noted that bank lending is contracting. And it dropped a reference in its previous statement to an improving housing market.

But on the positive side, the Fed said business spending on equipment and software seems to be rising. And it said economic activity “continues to strengthen.”

Against that backdrop, the Fed kept its target range for its bank lending rate at zero to 0.25 percent, where it’s stood since December 2008.

The Fed’s action drew dissent from one member who opposed the decision to retain a pledge to keep rates at record lows for an “extended period.” Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said the economy has improved sufficiently to drop the pledge, which has been in place for nearly a year.

Associated Press

Airline slump likely to carry on

Geneva – Airlines suffered the worst-ever fall in passenger demand in 2009, hampering their chances of early recovery and making another year of heavy losses all the more likely, an industry group said Wednesday.

Passenger demand dropped 3.5 percent last year, with companies struggling to fill more than three quarters of available seats on average flights, the International Air Transport Association said. Freight demand fared even worse, falling 10.1 percent year-on-year and filling less than half available capacity, the group said.

“In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen,” said IATA Chief Executive Giovanni Bisignani.

IATA restated its earlier estimate that the industry will lose $5.6 billion in 2010.

Associated Press