WASHINGTON — Gains in housing and manufacturing propelled the U.S. economy over the winter, according to reports released Tuesday, and analysts say they point to the resilience of consumers and businesses as government spending cuts kick in.
U.S. home prices rose 8.1 percent in January, the fastest annual rate since the peak of the housing boom in the summer of 2006. And demand for longer-lasting factory goods jumped 5.7 percent in February, the biggest increase in five months.
February new-home sales and March consumer confidence looked a little shakier. But the overall picture of an improving economy drove stocks higher on Tuesday.
The Standard & Poor's 500 gained 12 points to close at 1,563 -- a point away from its record high reached in October 2007. The Dow Jones industrial average rose 111.9 points, its biggest gain in three weeks.
"There is nothing in this data that says the economy is falling back," said Joel Naroff, chief economist at Naroff Economic Advisors.
The year-over-year rise in home prices reported by the Standard & Poor's/Case Shiller 20-city index was the fastest since June 2006. Prices rose in all 20 cities and eight markets posted double-digit increases, including some of those hit hardest during the crisis. Prices rose 23.2 percent in Phoenix, 17.5 percent in San Francisco and 15.3 percent in Las Vegas.
Home prices nationwide are still 29 percent below the peak they reached in August 2006.
Still, steady gains should encourage more people to buy and put their homes on the market, keeping the recovery going. And higher home prices make people feel wealthier, which leads consumers to spend more and drives more economic growth.
Manufacturing is also boosting the economy this year, and factories were busier in February, according to a separate Commerce report on durable goods orders.
February's increase was driven by a surge in commercial aircraft orders, which tend to be volatile. Still, orders for motor vehicles and parts increased solidly, suggesting demand for cars and trucks remains strong.
Orders for machinery and other goods that signal business investment plans fell sharply in February. But the decline followed the biggest monthly gain in nearly three years. Economists had expected companies to ease up after January's spending spree. When looking at the two months together, business investment has accelerated from the end of last year and should contribute to economic growth.