March 26 (Bloomberg) -- Sales of new homes in the U.S. probably fell in February to the lowest level in almost 13 years, economists said ahead of a government report today.

Purchases declined to a 578,000 annual pace from 588,000 in January, according to the median estimate of economists surveyed by Bloomberg News survey. That would be the fewest since February 1995.

A separate report may show orders to factories for durable goods rose in February, led by a jump in aircraft bookings that masked slowing demand elsewhere. The housing slump, already the worst in a generation, may deepen as mortgages become harder to get and buyers are scared off by falling property values.

``The overall sales outlook remains pretty weak,'' said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Residential investment in the first quarter is continuing to be a huge drag on economic growth. You've still got an unbelievable amount of downward pressure on home prices and buyers know this.''

The Commerce Department is scheduled to issue the new-home sales report at 10 a.m. in Washington. Forecasts in the Bloomberg News survey ranged from 560,000 and 600,000.

Commerce's report on durable goods is due at 8:30 a.m. Bookings for goods meant to last several years are projected to rise 0.7 percent, based on the survey median. Excluding transportation equipment, orders probably fell 0.3 percent.

Demand for aircraft tends to be volatile, so economists prefer to focus on underlying orders to gauge the strength of business investment.

Boeing Aircraft

Boeing Co., the world's second-biggest airplane maker, said March 6 that it received 125 orders in February compared with 65 in January, and deliveries rose to 39.

Excluding aircraft, the report is ``indicative of the fact that businesses have slowed their spending,'' Zentner said.

Companies catering to the housing industry are suffering some of the biggest declines in demand. Sherwin-Williams Co., the largest U.S. paint retailer, reduced its first-quarter and full-year earnings forecasts yesterday because of falling domestic sales and surging raw-material costs.

``Domestic market conditions remain very challenging with no apparent end in sight,'' Chief Executive Officer Christopher M. Connor said on a conference call with analysts and investors.

Fed Action

Federal Reserve policy makers said last week that the economic outlook had worsened and the ``deepening of the housing contraction'' was one factor likely to hurt growth in coming months. On March 18, the central bank cut its main lending rate by three-quarters of a percentage point to 2.25 percent.

The Fed has cut the rate by three percentage points since September and enacted other measures to try to keep the economy afloat. On March 16, it reduced the rate on direct loans to banks and said it will provide as much as $30 billion to JPMorgan Chase & Co. to help finance the purchase of Bear Stearns Cos. after a run on that securities dealer.

Other government agencies are also stepping in. The Office of Federal Housing Oversight last week lowered the capital requirement on Fannie Mae and Freddie Mac, the two-biggest sources of mortgage money, to 20 percent from 30 percent. The initiative may immediately pump $200 billion into the mortgage market.

Some reports indicate areas of the housing market have stopped declining for now. The National Association of Realtors said this week that sales of existing homes, which make up about 85 percent of the market, unexpectedly rose in February for the first time in seven months. The supply of existing homes for sale fell to 9.6 months, from 10.2 months in January.

Inventory Glut

The Realtors group has said a five to six months' supply is needed to stabilize the market. Elevated inventories in coming months will continue to pressure sellers to lower prices.

The S&P/Case-Shiller home-price index covering 20 U.S. metropolitan areas dropped 10.7 percent in January from a year earlier, the biggest decline on record, according to a report issued yesterday. A separate survey by the Office of Federal Housing Enterprise, covering only conforming mortgage loans up to $417,000, showed home prices fell 3 percent in January from a year earlier and were down 1.1 percent from December. The Ofheo measure represents canvasses the entire country.

                        Bloomberg Survey

================================================================
                          Durables Durables New Home
                            Orders Ex-Trans    Sales
                              MOM%     MOM%   ,000's
================================================================

Date of Release              03/26    03/26    03/26
Observation Period            Feb.     Feb.     Feb.
----------------------------------------------------------------
Median                        0.7%    -0.3%      578
Average                       0.8%    -0.2%      579
High Forecast                 3.0%     1.5%      600
Low Forecast                 -1.0%    -1.5%      560
Number of Participants          69       37       71
Previous                     -5.1%    -1.5%      588
----------------------------------------------------------------
4CAST Ltd.                    0.5%     0.0%      585
Action Economics              1.5%     0.4%      580
AIG Investments               0.7%     0.2%      593
Aletti Gestielle SGR          1.0%     ---       595
Analytical Synthesis          ---      ---       569
Argus Research Corp.          1.3%     ---       585
Banc of America Securitie     0.8%     ---       599
Bank of Tokyo- Mitsubishi     1.9%     ---       577
Bantleon Bank AG              0.9%    -0.4%      580
Barclays Capital              0.5%     ---       580
BBVA                          2.2%     0.9%      600
Bear, Stearns & Co.           0.5%     ---       575
BMO Capital Markets           0.3%    -0.8%      576
BNP Paribas                   1.5%     ---       570
Briefing.com                  1.5%     ---       570
Calyon                        1.5%     0.5%      576
CIBC World Markets            0.1%    -0.9%      579
Citi                         -0.5%     0.5%      575
ClearView Economics           1.0%     ---       590
Collineo Asset Mgmt           ---      ---       575
Commerzbank AG                1.5%     ---       580
Credit Suisse                 0.5%    -0.1%      560
Daiwa Securities America      0.5%     ---       580
Danske Bank                   ---      ---       582
DekaBank                      0.5%     ---       560
Desjardins Group              1.8%     ---       580
Deutsche Bank Securities     -1.0%    -0.5%      575
Deutsche Postbank AG          0.8%    -0.3%     ---
Dresdner Kleinwort            0.5%    -0.5%      580
DZ Bank                       1.5%    -0.5%      595
First Trust Advisors          0.8%    -0.5%      570
Fortis                        1.5%     ---       590
FTN Financial                 0.3%     0.0%      580
Global Insight Inc.           0.5%     ---       570
Goldman, Sachs & Co.          0.0%     ---       573
H&R Block Financial Advis     0.5%    -1.0%      580
Helaba                        2.0%     0.5%      580
HSBC Markets                  0.2%    -0.7%      560
IDEAglobal                   -1.0%    -0.9%      575
Informa Global Markets        0.5%     ---       582
ING Financial Markets         0.6%    -0.3%      574
Insight Economics             1.0%     ---       575
Intesa-SanPaulo               0.6%    -0.5%      600
J.P. Morgan Chase             1.7%     0.2%      575
Janney Montgomery Scott L     1.0%    -0.2%      570
JPMorgan Private Client       0.7%     ---       580
Landesbank Berlin             0.3%    -0.5%      600
Lehman Brothers               0.6%     ---       575
Lloyds TSB                    0.5%     0.3%      585
Maria Fiorini Ramirez Inc     ---      ---       560
Merrill Lynch                 3.0%     1.5%      574
Moody's Economy.com           0.8%    -0.9%      590
Morgan Keegan & Co.          -0.7%     ---       577
Morgan Stanley & Co.          1.4%     ---       580
National Bank Financial       0.5%    -0.5%      580
Natixis                       0.5%    -0.3%      577
Nomura Securities Intl.       0.6%    -0.4%      580
PNC Bank                      1.5%     ---       565
RBS Greenwich Capital         1.5%     ---       575
Ried, Thunberg & Co.          1.0%     ---       575
Scotia Capital                0.5%     ---       580
Societe Generale              1.0%     0.0%      590
Standard Chartered            0.7%    -0.1%     ---
Stone & McCarthy Research    -0.4%     ---       575
Thomson Financial/IFR         0.5%     0.0%      570
UBS Securities LLC           -1.0%    -1.5%      575
Unicredit MIB                 0.0%     ---       575
University of Maryland        0.8%     ---       580
Wachovia Corp.                0.3%    -0.7%      580
Wells Fargo & Co.             0.8%     0.4%      578
WestLB AG                     1.2%     ---       580
Westpac Banking Co.           1.0%     ---       576
Wrightson Associates          1.0%     ---       575
================================================================

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

Last Updated: March 26, 2008 00:01 EDT