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By Shobhana Chandra
April 24 (Bloomberg) -- New-home sales in the U.S. probably fell in March to the lowest level in 13 years, while overseas demand lifted orders for durable goods, economists said before government reports today.
Purchases of new homes dropped 1.7 percent from the prior month to an annual pace of 580,000, the fewest since February 1995, according to the median forecast in a Bloomberg News survey. Orders for products meant to last several years probably rose in March for the first time in three months.
A jump in subprime mortgage defaults and record foreclosures have worsened the real-estate slump and led banks to limit lending. Growing exports are mitigating the damage on American factories from the collapse in residential construction and credit crisis that may cause the economy to contract.
``It's highly likely the U.S. economy is in a recession, and housing is certainly at the center,'' said Avery Shenfeld, a senior economist at CIBC World Markets Inc. in Toronto. ``This year is going to be very soft.''
The Commerce Department will issue new-home purchase figures in Washington at 10 a.m. Estimates in the Bloomberg survey of 75 economists ranged from 560,000 to 602,000.
At 8:30 a.m., a Commerce report on orders for long-lasting goods may show bookings rose 0.1 percent last month, according to the survey median. Orders excluding transportation equipment probably rose 0.5 percent, also the first gain in three months.
Reports this week signaled the housing recession is far from over as prices and demand continue to slide. Home values dropped 2.4 percent in February from a year earlier, the Washington-based Office of Federal Housing Enterprise Oversight said.
Home Resales
Sales of previously owned homes, which account for about 85 percent of the market, fell 2 percent in March, according to the National Association of Realtors. It was the seventh decline in eight months.
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 transaction closes, usually a month or two later.
Declines in residential construction have subtracted from economic growth since the first three months of 2006, culminating in a 25 percent drop last year that was the biggest since 1980.
Economic growth slowed in nine of 12 Fed districts since February and homebuilding is ``generally anemic,'' according to the Federal Reserve's regional business survey, known as the Beige Book. Fed Chairman Ben S. Bernanke this month conceded a recession is possible as housing, employment and consumer spending deteriorate.
Housing-related businesses are struggling. Sherwin-Williams Co., the largest U.S. paint retailer, reported a 30 percent decline in first-quarter profit as the housing slump hurt demand and raw-material costs rose.
``We are not counting on a near-term recovery in the housing markets,'' Chief Executive Officer Christopher Connor said on a conference call with investors on April 22. ``We expect the new-housing market to continue to spiral downward this year.''
Bloomberg Survey
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Durables Durables Initial New Home
Orders Ex-Trans Claims Sales
MOM% MOM% ,000's ,000's
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Date of Release 04/24 04/24 04/24 04/24
Observation Period March March 20-Apr March
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Median 0.1% 0.5% 375 580
Average 0.2% 0.5% 376 581
High Forecast 2.7% 2.4% 385 602
Low Forecast -2.3% -1.0% 360 560
Number of Participants 78 42 41 75
Previous -1.1% -2.4% 372 590
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4CAST Ltd. 0.0% 1.0% 380 580
Action Economics -0.5% -0.2% 375 588
AIG Investments 0.5% 1.0% --- 596
Aletti Gestielle SGR -0.1% --- 378 575
Argus Research Corp. 0.5% --- --- 585
Banc of America Securitie -0.8% --- --- 585
Banesto 0.1% --- 375 590
Bank of Tokyo- Mitsubishi 0.1% --- 375 586
Bantleon Bank AG -0.6% -0.3% --- 600
Barclays Capital 1.0% --- 375 575
BBVA -0.4% -0.1% 376 580
Bear, Stearns & Co. -1.9% --- 375 580
BMO Capital Markets -1.7% 0.0% 375 573
BNP Paribas 0.7% --- 380 570
Briefing.com -0.5% --- 375 585
Calyon 0.0% -0.1% --- 578
CEMEX 2.0% 2.4% --- ---
CFC Group 0.5% 0.4% 380 577
CIBC World Markets -0.5% -0.2% --- 580
Citi -2.3% -0.2% --- 585
ClearView Economics 0.5% --- --- 585
Collineo Asset Mgmt --- --- --- 570
Commerzbank AG -0.5% --- 375 585
Credit Suisse -1.7% -0.2% 375 560
Daiwa Securities America 0.7% --- --- 580
Danske Bank --- --- --- 585
DekaBank 0.5% --- --- 560
Desjardins Group -0.7% --- 378 580
Deutsche Bank Securities -0.5% -1.0% 375 585
Deutsche Postbank AG 0.2% 0.5% --- ---
Dresdner Kleinwort -0.5% 0.0% --- 585
DZ Bank -0.3% 0.0% --- 580
First Trust Advisors -0.2% 0.6% 377 590
Fortis 0.5% --- --- 600
FTN Financial 0.2% 0.4% --- 580
Global Insight Inc. 0.6% --- --- 575
Goldman, Sachs & Co. 0.0% --- --- 602
H&R Block Financial Advis -0.5% 0.0% 385 585
Helaba 0.5% 0.8% --- 585
Horizon Investments 0.2% 0.6% --- 590
HSBC Markets 0.0% 0.1% 375 575
IDEAglobal 0.5% 0.3% 380 582
Informa Global Markets -0.1% --- 380 ---
ING Financial Markets 1.5% -0.4% --- 578
Insight Economics 0.8% --- 375 580
Intesa-SanPaulo 0.1% 0.5% --- 585
J.P. Morgan Chase -0.8% 1.0% 375 585
Janney Montgomery Scott L 0.1% 0.3% --- 580
JPMorgan Private Client -0.2% --- 375 590
Landesbank Berlin -0.7% 0.5% 380 585
Landesbank BW 0.0% --- --- 580
Lehman Brothers -0.7% --- 385 575
Lloyds TSB 0.4% 0.8% 360 585
Maria Fiorini Ramirez Inc --- --- 375 580
Merrill Lynch 2.7% 2.4% 375 578
MFC Global Investment Man 0.2% 0.8% 375 570
Moody's Economy.com 1.0% 1.5% 375 583
Morgan Keegan & Co. 0.3% --- --- ---
Morgan Stanley & Co. -0.5% --- --- 584
National Bank Financial 0.4% -0.2% --- 580
National City Corporation 1.9% --- --- 570
Newedge 0.3% 0.5% --- 583
Nomura Securities Intl. 0.9% 1.2% --- 585
Nord/LB -0.3% 1.3% 375 ---
PNC Bank 1.0% --- --- 575
RBS Greenwich Capital 0.0% --- --- 570
Ried, Thunberg & Co. 2.0% --- 380 ---
Scotia Capital -0.1% -0.5% --- 580
Societe Generale 1.0% 1.0% 370 590
Standard Chartered 0.1% --- --- 580
Stone & McCarthy Research 2.5% --- --- 585
Thomson Financial/IFR 2.3% 1.9% 375 580
Tullett Prebon 0.0% --- 370 570
UBS Securities LLC -0.5% 0.5% 375 585
Unicredit MIB -1.0% --- 370 575
University of Maryland 0.3% --- --- 580
Wachovia Corp. 1.7% 1.0% --- 590
Wells Fargo & Co. -0.5% -0.2% 375 588
WestLB AG -0.5% --- --- 585
Westpac Banking Co. -1.0% --- 380 560
Wrightson Associates 2.0% --- 380 575
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: April 24, 2008 00:01 EDT
