SYMBOL LOOKUP
HOME
By Shobhana Chandra
May 27 (Bloomberg) -- New-home sales in the U.S. probably fell to a 17-year low and consumer confidence sank, signs the housing slump is dragging down the economy, economists said before reports today.
Purchases of new homes dropped 1.1 percent in April to an annual pace of 520,000, the fewest since September 1991, according to the median forecast in a Bloomberg News survey. A separate report may show a measure of consumer confidence fell this month to the lowest since 1993.
Concern about declining home values and stricter loan rules are limiting demand and foreclosures throw even more properties on the market. Federal Reserve policy makers view the prospect of larger decreases in house prices and the effect that would have on financial institutions as a ``key source'' of risk to growth.
``House prices are falling in more places and at an accelerated rate,'' said Patrick Newport, an economist at Global Insight Inc. in Lexington, Massachusetts. ``On top of this, consumer sentiment is at recessionary levels, and gasoline prices are at record highs. All of this adds up to a dismal house- selling season.''
The Commerce Department's report on new-home purchases is due at 10 a.m. in Washington. Estimates ranged from 500,000 to 570,000, according to the Bloomberg survey of 61 economists. The March rate was 526,000.
The Conference Board, a New York research group, is due to issue its confidence report at the same time. The median estimate of economists surveyed projected the index would drop to 60 from 62.3 in April. Projections ranged from 57 to 63.
Prices Drop
A report from S&P/Case-Shiller at 9:00 a.m. may show house prices in 20 U.S. metropolitan areas plunged 14.2 percent in March from a year earlier, the most since records were first published in 2001, the Bloomberg survey showed.
The housing downturn and strains on the consumer led Fed policy makers last month to cut their 2008 growth estimate by almost 1 percentage point.
``The outlook for the housing market remained bleak,'' according to minutes of the Fed's April meeting, released May 21. ``The possibility that house prices could decline by more than anticipated, and that the effects of such a decline could be amplified through their impact on financial institutions and financial markets, remained a key source of downside risk to participants' projections for economic growth.''
Foreclosure filings were up 65 percent in April from a year earlier, according to RealtyTrac Inc., an Irvine, California- based seller of default data.
Sales Decline
Sales of previously owned homes, which account for about 85 percent of the market, fell 1 percent in April, and the supply of unsold properties reached a record, the National Association of Realtors said last week.
New-home purchases, which make up the remaining 15 percent of the market, are considered a timelier indicator because they are based on contract signings. Resales are calculated when a contract closes, usually a month or two later.
Weak demand will cause builders to keep pulling back. Declines in residential construction have subtracted from economic growth since the first three months of 2006. Work began in April on the fewest single-family homes in 17 years, Commerce reported earlier this month.
Housing-related companies are hurting. Wolseley Plc, the world's biggest distributor of plumbing and heating equipment, reported a 30 percent drop in nine-month profit. The Reading, England-based firm, which gets half its sales from North America, said it may cut more jobs to lower costs.
``We continue to expect the U.S. housing market to get slightly worse before it gets better,'' Stephen Webster, the company's finance director, said in a conference call with journalists last week. ``We would like to see a few months of stable housing starts or increasing housing starts before we call the bottom.''
Bloomberg Survey
================================================================
Case Shil Consumer New Home
Monthly Conf Sales
YOY% Index ,000's
================================================================
Date of Release 05/27 05/27 05/27
Observation Period March May April
----------------------------------------------------------------
Median -14.2% 60.0 520
Average -14.2% 60.2 527
High Forecast -12.9% 63.0 570
Low Forecast -15.1% 57.0 500
Number of Participants 15 63 61
Previous -12.7% 62.3 526
----------------------------------------------------------------
4CAST Ltd. -14.2% 61.0 540
Action Economics --- 61.0 520
Argus Research Corp. --- 63.0 527
Banc of America Securitie --- 61.0 530
Bank of Tokyo- Mitsubishi --- 61.0 520
Bantleon Bank AG --- 59.6 530
BBVA --- 62.0 570
BMO Capital Markets -14.8% 61.0 520
BNP Paribas --- 60.0 500
Briefing.com --- 61.0 515
Calyon --- 61.5 515
CIBC World Markets --- 59.0 510
Citi --- 59.5 515
Commerzbank AG --- 60.0 520
Credit Suisse --- 60.0 535
Daiwa Securities America --- 60.0 520
Danske Bank --- 58.0 510
DekaBank --- 60.0 530
Desjardins Group -13.4% 60.9 515
Deutsche Bank Securities --- 60.0 505
Deutsche Postbank AG --- 61.0 ---
Dresdner Kleinwort -14.2% 61.0 518
DZ Bank -13.9% 60.0 510
First Trust Advisors --- 61.1 526
Fortis -15.0% 60.0 525
FTN Financial --- --- 520
Goldman, Sachs & Co. --- 60.0 542
H&R Block Financial Advis --- 61.0 520
Helaba --- 60.0 545
HSBC Markets -13.8% 59.0 560
IDEAglobal --- 61.0 515
Informa Global Markets --- 61.0 530
ING Financial Markets -15.1% 60.0 515
Insight Economics --- 60.0 520
Intesa-SanPaulo --- 62.0 530
J.P. Morgan Chase --- 59.0 540
Landesbank Berlin --- 57.0 550
Landesbank BW --- 60.5 540
Lehman Brothers -14.7% 60.0 526
Lloyds TSB -14.0% 62.5 520
Maria Fiorini Ramirez Inc --- 60.0 540
Merrill Lynch -14.2% 58.0 510
MFC Global Investment Man --- 59.5 520
Moody's Economy.com --- 59.5 530
Morgan Stanley & Co. --- 58.0 540
National Bank Financial --- 59.0 ---
National City Corporation --- 59.4 570
Natixis -14.0% 60.0 530
Newedge --- 61.5 538
Nomura Securities Intl. --- --- 550
Nord/LB --- 59.5 ---
PNC Bank --- --- 520
RBS Greenwich Capital --- 61.0 520
Ried, Thunberg & Co. --- 59.0 525
Schneider Trading Associa -12.9% 60.2 ---
Societe Generale --- 58.0 548
Stone & McCarthy Research --- 63.0 550
Thomson Financial/IFR --- 60.0 515
Unicredit MIB -14.0% 60.0 510
Union Investment --- 60.5 ---
University of Maryland --- 60.0 519
Wachovia Corp. --- 57.5 510
Wells Fargo & Co. --- 61.0 520
WestLB AG --- 60.0 500
Westpac Banking Co. -15.1% 60.0 540
Wrightson Associates --- 61.0 525
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: May 27, 2008 00:01 EDT
