Existing-Home Sales in U.S. Probably Dropped in May to Lowest This Year

Photographer: Ty Wright/Bloomberg

Wanda Doerksen squeegees the patio doors of her home as she prepares for an open house in Eugene, Oregon. Close

Wanda Doerksen squeegees the patio doors of her home as she prepares for an open house in Eugene, Oregon.

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Photographer: Ty Wright/Bloomberg

Wanda Doerksen squeegees the patio doors of her home as she prepares for an open house in Eugene, Oregon.

Sales of previously owned U.S. homes probably fell in May to the lowest level this year, a sign that housing lags behind other parts of the economy, economists said before a report today.

Purchases fell 5 percent to a 4.8 million annual pace, the fewest since November, according to the median forecast of 69 economists surveyed by Bloomberg News. A 13-year low 4.91 million existing houses were sold last year.

An unemployment rate hovering around 9 percent and strict lending rules mean it may take years to absorb the 1.8 million distressed properties on the market that are weighing down home values. The state of the housing market is one reason why Federal Reserve policy makers are likely to maintain record stimulus when they meet this week.

“The housing recovery is still looking pretty distant,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Buyers lack the confidence and access to credit that are important to driving sales.”

The National Association of Realtors will release the figures at 10 a.m. in Washington. Estimates for home sales in the Bloomberg survey ranged from 4.5 million to 5.18 million.

The number of existing homes sold peaked at 7.08 million in 2005. Nonetheless, they comprise about 94 percent of all purchases now, up from about 85 percent six years ago as foreclosures and distressed sales lure some buyers.

Photographer: Jim R. Bounds/Bloomberg

The 1.8 million of inventory of distressed homes nationwide would take about three years to sell at the current pace, Daren Blomquist, communications manager at RealtyTrac Inc., said last week. Close

The 1.8 million of inventory of distressed homes nationwide would take about three... Read More

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Photographer: Jim R. Bounds/Bloomberg

The 1.8 million of inventory of distressed homes nationwide would take about three years to sell at the current pace, Daren Blomquist, communications manager at RealtyTrac Inc., said last week.

Distressed Properties

The 1.8 million of inventory of distressed homes nationwide would take about three years to sell at the current pace, Daren Blomquist, communications manager at RealtyTrac Inc., said last week.

Competition from existing homes selling at discounted prices is hurting builders. Sales of new properties dropped 4 percent in May to a 310,000 annual pace, economists said ahead of a June 23 report from the Commerce Department. A record-low 323,000 new homes were sold last year.

“We still see housing demand at very weak levels,” Bill Wheat, chief financial officer at D.R. Horton Inc., the second- largest U.S. homebuilder by revenue, said last month at a housing conference in New York. “It could still be a struggle in 2012.”

Homebuilders are underperforming the overall market. The Standard & Poor’s 500 Homebuilding Index has declined 3.4 percent this year, compared with a 1.7 percent gain in the broader S&P 500 Index.

Fed Chairman Ben S. Bernanke has been among those forecasting that the recent slowdown in growth will prove temporary as commodity prices retreat. At the same time, the central bank should maintain record stimulus to bolster a “frustratingly slow” recovery, he said this month. Officials are scheduled to meet in Washington today and tomorrow to determine the course of policy.

                        Bloomberg Survey

===========================================
                             Exist    Exist
                             Homes    Homes
                              Mlns     MOM%
===========================================

Date of Release              06/21    06/21
Observation Period             May      May
-------------------------------------------
Median                        4.80    -5.0%
Average                       4.79    -5.1%
High Forecast                 5.18     2.6%
Low Forecast                  4.50   -10.9%
Number of Participants          69       69
Previous                      5.05    -0.8%
-------------------------------------------
4CAST                         4.70    -6.9%
ABN Amro                      4.80    -5.0%
Action Economics              4.75    -5.9%
Aletti Gestielle              5.10     1.0%
Ameriprise Financial          4.85    -4.0%
Banesto                       4.80    -5.0%
Bank of Tokyo- Mitsubishi     4.70    -6.9%
Bantleon Bank AG              4.71    -6.7%
Barclays Capital              4.80    -5.0%
BBVA                          4.90    -3.0%
BMO Capital Markets           4.60    -8.9%
BNP Paribas                   4.60    -8.9%
BofA Merrill Lynch            4.80    -5.0%
Briefing.com                  4.70    -6.9%
Capital Economics             4.50   -10.9%
CIBC World Markets            5.00    -1.0%
Citi                          4.80    -5.0%
ClearView Economics           5.10     1.0%
Commerzbank AG                4.80    -5.0%
Credit Suisse                 4.80    -5.0%
DekaBank                      4.85    -4.0%
Deutsche Bank Securities      5.18     2.6%
First Trust Advisors          4.85    -4.0%
FTN Financial                 4.65    -7.9%
Goldman, Sachs & Co.          4.80    -5.0%
Helaba                        4.80    -5.0%
HSBC Markets                  4.70    -6.9%
Hugh Johnson Advisors         5.00    -1.0%
IDEAglobal                    4.80    -5.0%
Informa Global Markets        4.78    -5.4%
Insight Economics             4.95    -2.0%
Intesa-SanPaulo               4.80    -5.0%
J.P. Morgan Chase             4.80    -5.0%
Jefferies & Co.               4.95    -2.0%
Landesbank Berlin             4.65    -7.9%
Landesbank BW                 4.75    -5.9%
Manulife Asset Management     4.90    -3.0%
Maria Fiorini Ramirez         4.75    -5.9%
MET Capital Advisors          5.10     1.0%
MF Global                     4.90    -3.0%
Mizuho Securities             4.75    -6.0%
Moody’s Analytics             4.83    -4.4%
Morgan Stanley & Co.          4.80    -5.0%
National Bank Financial       4.65    -7.9%
Natixis                       4.93    -2.4%
Nomura Securities             4.64    -8.1%
OSK Group/DMG                 4.80    -5.0%
Parthenon Group               4.77    -5.5%
Pierpont Securities           4.60    -8.9%
PineBridge Investments        4.75    -6.0%
PNC Bank                      4.95    -2.0%
Raiffeisenbank International  4.85    -4.0%
Raymond James                 4.90    -3.0%
RBC Capital Markets           4.60    -8.9%
RBS Securities                4.70    -6.9%
Scotia Capital                4.70    -6.9%
SMBC Nikko Securities         4.75    -5.9%
Societe Generale              4.60    -8.9%
Standard Chartered            4.80    -5.0%
State Street Global Markets   4.78    -5.4%
Stone & McCarthy Research     4.75    -5.9%
TD Securities                 4.75    -5.9%
UBS                           4.80    -5.0%
UniCredit Research            4.60    -8.9%
University of Maryland        4.79    -5.2%
Wells Fargo & Co.             4.76    -5.7%
WestLB AG                     4.85    -4.0%
Westpac Banking Co.           4.75    -6.0%
Wrightson ICAP                4.85    -4.0%
===========================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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