Pending Sales of Existing Homes in U.S. Increase 5.1%, More Than Estimated
The number of Americans signing contracts to buy previously owned homes rose more than forecast in March, a sign the industry that triggered the recession may begin to stabilize.
The index of pending home resales climbed 5.1 percent after a revised 0.7 percent increase the prior month, the National Association of Realtors said today in Washington. The median forecast in a Bloomberg News survey called for a 1.5 percent rise.
An improving job market, falling home prices and low borrowing costs may help to attract more buyers in coming months. At the same time, foreclosures are worsening the glut of unsold properties, one reason a sustained housing recovery is yet to develop almost two years after the end of the recession.
“Positive news on the housing market is welcomed with open arms,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “The sector should receive support from job growth and lending rates, which are expected to stay fairly low.”
Sales were projected to rise after an originally reported gain of 2.1 percent in February, according to the median of 32 forecasts in the Bloomberg survey. Estimates ranged from no change to a gain of 3.2 percent. From a year earlier, pending home sales fell 11.5 percent.
Three of four regions saw increases from the prior month, today’s report showed. That included gains of 10.3 percent in the South, 3.1 percent in the West and 3 percent in the Midwest. Pending purchases dropped 3.2 percent in the Northeast.
Economic Growth Slows
Other reports today showed gross domestic product growth slowed more than forecast in the first quarter and initial claims for unemployment benefits unexpectedly increased last week.
Stocks were little changed as better-than-forecast corporate earnings and takeovers offset concern over slower growth. The Dow Jones Industrial Average rose 15.82 points, or 0.1 percent, to 12,706.78 at 11:57 a.m. in New York.
Fed officials, at the end of their two-day meeting in Washington yesterday, voted to complete $600 billion in Treasury purchases in June to spur growth.
“The housing sector continues to be depressed,” policy makers said yesterday in a statement, while “the economic recovery is proceeding at a moderate pace.”
Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later.
Existing Home Sales
Sales of previously-owned homes, which make up about 95 percent of the housing market so far this year, climbed 3.7 percent to a 5.1 million annual rate in March as a mounting supply of properties in or near foreclosure lured investors, the Realtors group reported on April 20.
All-cash deals made up 35 percent of the transactions, the most on record, while distressed properties including foreclosures and short sales accounted for 40 percent of all deals, the Realtors report showed last week.
New-home purchases, which are considered a more timely barometer than existing-house sales, climbed 11.1 percent last month from a record low in February, Commerce Department figures showed April 25.
Potlatch Corp. (PCH), a timber producer, projects home construction will take longer to rebound. At the beginning of the year, the Spokane, Washington-based company expected housing starts would begin a recovery in the second half, reaching about 1 million starts on an annualized basis late in 2012, according to Chief Executive Officer Michael Covey.
That forecast “will get pushed out six to 12 months as the recovery in housing languishes due to high unemployment and an oversupply of existing homes for sale,” Covey said on a conference call with analysts on April 26.
Prices remain under pressure. The S&P/Case-Shiller index of home values in 20 cities, reported this week, fell 3.3 percent in the 12 months to February, the most in more than a year.
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