Sales of New U.S. Homes Probably Rose From Record Low as Market Struggled
Sales of New Homes in U.S. Probably Climbed From Record Low
Jim R. Bounds/Bloomberg
New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes.
New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes. Photographer: Jim R. Bounds/Bloomberg
April 20 (Bloomberg) -- Michelle Meyer, a senior economist at Bank of America Merrill Lynch, talks about the outlook for the U.S. housing market. Sales of U.S. previously owned homes rose in March as a mounting supply of properties in or near foreclosure lured investors. Meyer talks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
Purchases of new houses in the U.S. probably rose in March from a record low, economists said a report today will show.
New-home sales, tabulated when contracts are signed, climbed 12 percent to a 280,000 annual pace last month, according to the median estimate in a Bloomberg News survey of 64 economists. Purchases slumped 17 percent in February to a 250,000 rate, the weakest in data going back to 1963.
“A housing recovery is going to be slow,” said Michael Gapen, a senior U.S. economist at Barclays Capital Inc. in New York. “I see light at the end of the tunnel, but I see a lot more tunnel. We still have tight credit conditions, and we need plain, outright job growth to spur demand.”
The market for new homes faces competition from a glut of foreclosed properties that may keep prices depressed through the year, discouraging new construction. Housing’s struggles help explain why the Federal Reserve may announce at the conclusion of this week’s policy meeting that it plans to complete the purchase of $600 billion of Treasuries by June.
The Commerce Department report is due at 10 a.m. in Washington. Economists’ forecasts ranged from 247,000 to 300,000.
Purchases of previously owned homes climbed 3.7 percent to a 5.1 million annual rate in March as properties in or near foreclosure lured investors, a National Association of Realtors report showed April 20. All-cash deals accounted for 35 percent of the transactions, the most on record, while distressed properties including foreclosures and short sales made up 40 percent of all deals, the group said.
More Timely
New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes. Resales account for about 95 percent of the housing market so far this year.
Housing demand gyrated in 2010 as a boost from a homebuyer tax incentive of as much as $8,000 gave way to a mid-year plunge after the credit ended.
The lack of demand is keeping builders pessimistic. The National Association of Home Builders’ confidence index fell to 16 this month from 17 in March. A reading under 50 means a majority of builders view conditions as poor.
The S&P Supercomposite Homebuilder Index, which includes Toll Brothers Inc. and Lennar Corp., has climbed 1.3 percent this year, trailing a 6.3 percent gain in the broader S&P 500 Index. (SPX)
Orders Slump
KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, reported a bigger-than-expected loss for the quarter ended Feb. 28 as orders plunged.
“A sustained, broad-based housing recovery will not occur until we start to experience material job creation,” Chief Executive Officer Jeffrey Mezger said during a conference call with analysts on April 5.
An unemployment rate projected to average 8.7 percent in 2011, according to a Bloomberg survey earlier this month, may force more owners into distress. Foreclosure filings will climb about 20 percent in 2011, reaching a peak for the housing crisis, according to a forecast in January from RealtyTrac Inc., an Irvine, California-based data seller.
The housing market was either “little changed from low levels” or weaker across the country, the Fed said in its Beige Book report on April 13. The lack of a sustained housing rebound is among reasons policy makers will complete their $600 billion asset purchase plan and hold borrowing costs near zero.
Central bankers conclude a two-day policy meeting on April 27. At their March 15 meeting, officials said in their statement that the “housing sector continues to be depressed.”
Bloomberg Survey
======================================
4/22/2011 New Home New Home
Sales Sales
,000’s MOM%
======================================
Date of Release 04/25 04/25
Observation March March
--------------------------------------
Median 280 12.0%
Average 280 12.2%
High Forecast 300 20.0%
Low Forecast 247 -1.2%
# of replies 64 64
Previous 250 -16.9%
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======================================
4/22/2011 New Home New Home
Sales Sales
,000’s MOM%
======================================
4CAST Ltd. 288 15.2%
ABN Amro Inc. 275 10.0%
Action Economics 280 12.0%
Aletti Gestielle 280 12.0%
Ameriprise Financ 275 10.0%
Bank of Tokyo- Mi 270 8.0%
Bantleon Bank AG 290 16.0%
Barclays Capital 270 8.0%
BBVA 262 4.8%
BMO Capital Marke 280 12.0%
BNP Paribas 290 16.0%
BofA Merrill Lync 285 14.0%
Briefing.com 265 6.0%
Capital Economics 275 10.0%
CIBC World Market 275 10.0%
Citi 290 16.0%
======================================
4/22/2011 New Home New Home
Sales Sales
,000’s MOM%
======================================
ClearView Economi 280 12.0%
Commerzbank AG 275 10.0%
Credit Agricole C 275 10.0%
Credit Suisse 270 8.0%
Daiwa Securities 280 12.0%
DekaBank 290 16.0%
Desjardins Group 290 16.0%
Deutsche Bank Sec 275 10.0%
DZ Bank 260 4.0%
First Trust Advis 275 10.0%
FTN Financial 290 16.0%
Goldman, Sachs & 275 10.0%
HSBC Markets 290 16.0%
Hugh Johnson Advi 280 12.0%
IDEAglobal 275 10.0%
IHS Global Insigh 299 19.6%
======================================
4/22/2011 New Home New Home
Sales Sales
,000’s MOM%
======================================
Informa Global Ma 285 14.0%
ING Financial Mar 290 16.0%
Insight Economics 300 20.0%
Intesa-SanPaulo 280 12.0%
J.P. Morgan Chase 270 8.0%
Janney Montgomery 275 10.0%
Jefferies & Co. 290 16.0%
Manulife Asset Ma 265 6.0%
MET Capital Advis 247 -1.2%
MF Global 295 18.0%
Moody’s Analytics 290 16.0%
Morgan Keegan & C 259 3.6%
Morgan Stanley & 280 12.0%
Natixis 285 14.0%
Nomura Securities 290 16.0%
OSK Group/DMG 290 16.0%
======================================
4/22/2011 New Home New Home
Sales Sales
,000’s MOM%
======================================
Parthenon Group 280 12.0%
Pierpont Securiti 300 20.0%
PineBridge Invest 273 9.0%
PNC Bank 250 0.0%
RBC Capital Marke 290 16.0%
RBS Securities In 300 20.0%
Scotia Capital 275 10.0%
Societe Generale 288 15.2%
State Street Glob 294 17.6%
Stone & McCarthy 290 16.0%
TD Securities 283 13.0%
UBS 290 16.0%
University of Mar 280 12.0%
Wells Fargo & Co. 287 14.8%
Westpac Banking C 268 7.0%
Wrightson ICAP 280 12.0%
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To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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