Although the holiday sales season was lackluster, overall consumer spending is improving as a result of increased confidence in the housing market.
Manufacturing also rebounded in the area surrounding the Federal Reserve Bank of Richmond, VA, although sales and orders were not as strong in December as they were in November.
The housing price increase as reflected in the S&P/Case-Shiller Index accelerated from the 3% advance reflected in September.
The index is based on a three-month average. This means the data reported in October were influenced by activity in August and September.
Residential homebuilding contributed to gross domestic product (GDP) for the first time since 2005.
Seasonally adjusted home prices rose .7% in October from the September report with 17 of the 20 cities in the index reporting gains.
Year-over-year gains were reflected in 18 of the 20, indicating an improvement in pricing trends for housing.
The three-month lag in the Case-Shiller index also means that declining numbers in current months based on concerns about the fiscal cliff will not be reflected until January and February.

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