Sales of Existing U.S. Homes Probably Fell as Lack of Jobs Hurt Confidence
Sales of Existing U.S. Homes Probably Decreased in September
Jim R. Bounds/Bloomberg
A Re/Max International Inc. for sale sign is displayed outside of a home in Durham, North Carolina, U.S. Growing pessimism about the economy, unemployment above 9 percent and limited access to credit are keeping some Americans from taking advantage of near record-low mortgage rates.
A Re/Max International Inc. for sale sign is displayed outside of a home in Durham, North Carolina, U.S. Growing pessimism about the economy, unemployment above 9 percent and limited access to credit are keeping some Americans from taking advantage of near record-low mortgage rates. Photographer: Jim R. Bounds/Bloomberg
Sales of existing U.S. homes probably fell in September, extending a pattern of gains and losses that shows the industry is being buffeted by a lack of jobs and confidence, economists said before a report today.
Purchases declined 2.5 percent to a 4.91 million annual rate, according to the median of 77 economists surveyed by Bloomberg News. A Labor Department report today on claims for unemployment benefits showed scant improvement in the pace of dismissals.
Growing pessimism about the economy, unemployment above 9 percent and limited access to credit are keeping some Americans from taking advantage of near record-low mortgage rates. Foreclosures that are adding to the supply of homes for sale and driving down prices remain a hurdle for an industry that’s made little progress more than two years after the recession ended.
“Weakness in housing isn’t going to change in the short or medium term,” said Jennifer Lee, an economist at BMO Capital Markets in Toronto. “Talk of recession or slowdown, an uncertain job market and volatile financial markets are holding back activity.”
The National Association of Realtors’ data are due at 10 a.m. in Washington. Economists’ estimates ranged from 4.7 million to 5.1 million.
Jobless claims dropped by 6,000 to 403,000 in the week ended Oct. 15, today’s Labor Department figures showed. The median forecast in a Bloomberg News survey called for a drop to 400,000 applications. The four-week average fell to the lowest level since April.
Home Prices
A glut of distressed properties on the market is holding down prices, keeping housing from contributing to the economic rebound. Unemployment has been 9.1 percent for the last three months, wages are stagnate and stock prices have dropped this year on concerns about a European sovereign debt default and recession.
Default notices rose 14 percent in the third quarter from the prior three months, a sign lenders may be speeding up the repossession process, RealtyTrac Inc. said last week. Foreclosure filings declined 34 percent in the third quarter from a year earlier as states continued to probe allegations of foreclosure “robo-signings” and lenders scrutinized paperwork, according to RealtyTrac.
Housing prices keep falling even in the face of near-record low lending rates. The S&P/Case-Shiller index of property values in 20 cities dropped 4.1 percent in July from a year earlier, the group said Sept. 27. Prices were 31 percent below their July 2006 peak.
Mortgage Rates
The average rate for a 30-year fixed loan dropped to 3.94 percent in the first week of October, the lowest in records dating back to 1971, according to Freddie Mac.
Cheaper borrowing costs may help explain why homebuilders were less pessimistic in October. The National Association of Home Builders/Wells Fargo sentiment index unexpectedly increased to 18, the highest level since May 2010, figures showed this week. Readings less than 50 mean more respondents said conditions were poor.
Scottsdale, Arizona-based Meritage Homes Corp. (MTH), which builds energy-efficient single-family homes, saw its sales in the quarter ended in September rise from a year earlier even as demand remains at “depressed levels,” executive vice president Brent Anderson said on an Oct. 12 conference call.
“We need to have more people in jobs, good, well-paying, full-time jobs,” Anderson said. “It’s really a matter of confidence.”
Builder Shares
Builders have fared worse than the broader stock market. The Standard & Poor’s Supercomposite Homebuilding Index, which includes Meritage and Lennar Corp., has slumped about 21 percent so far this year, compared with a 3.8 percent drop for the S&P 500.
Federal Reserve Chairman Ben S. Bernanke said Oct 4 that the central bank was ready to take further steps to boost an economy that he said was “close to faltering.” Speaking before Congress’s Joint Economic Committee, Bernanke said home construction was not aiding the expansion, unlike in prior recoveries.
He said “the overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and the large number of ‘underwater’ mortgages” have hurt home construction.
Bloomberg Survey
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Initial Exist LEI Philly
Claims Homes Fed
,000’s Mlns MOM% Index
===============================================================
Date of Release 10/20 10/20 10/20 10/20
Observation Period 15-Oct Sept. Sept. Oct.
----------------------------------------------------------------
Median 400 4.91 0.2% -9.6
Average 403 4.91 0.2% -8.9
High Forecast 420 5.10 0.5% 1.0
Low Forecast 390 4.70 -0.1% -16.5
Number of Participants 46 77 54 57
Previous 404 5.03 0.3% -17.5
----------------------------------------------------------------
4CAST 408 4.84 --- -12.0
ABN Amro 405 5.00 --- -10.0
Action Economics 400 4.75 0.2% -9.0
Aletti Gestielle 405 4.85 0.2% -10.0
Ameriprise Financial --- 4.85 0.2% -8.0
Banesto --- 4.90 0.2% -8.7
Barclays Capital 400 4.85 0.2% -10.0
Bayerische Landesbank --- --- 0.4% -9.0
BBVA 400 5.10 0.2% -5.0
BMO Capital Markets 400 4.88 0.2% -9.0
BNP Paribas 415 4.70 0.2% -10.0
BofA Merrill Lynch 400 4.75 0.2% -9.0
Briefing.com 400 5.10 0.3% -5.0
Capital Economics --- 4.95 0.2% -10.0
CIBC World Markets --- 4.85 --- ---
Citi 400 4.95 0.2% -10.0
ClearView Economics --- 5.00 --- -5.0
Comerica --- 4.90 0.2% ---
Commerzbank AG 400 4.90 0.2% -10.0
Credit Agricole CIB --- 4.93 --- -12.0
Credit Suisse 400 4.95 0.3% ---
Daiwa Securities America --- 5.00 0.3% ---
Danske Bank --- 4.92 --- -10.0
DekaBank --- 4.95 0.2% -6.0
Desjardins Group 405 4.97 0.2% -5.0
Deutsche Bank Securities 400 4.85 0.4% -8.0
Deutsche Postbank AG --- --- 0.2% ---
DZ Bank --- 4.85 0.2% -11.0
Exane --- 4.95 --- -10.0
First Trust Advisors 405 4.82 0.3% -12.5
FTN Financial --- 5.05 --- ---
Goldman, Sachs & Co. --- 4.83 --- -7.0
Helaba 405 4.90 0.2% -10.0
High Frequency Economics 415 4.90 0.3% ---
HSBC Markets 410 5.00 --- -10.5
Hugh Johnson Advisors --- 4.90 0.1% -10.0
IDEAglobal 400 5.00 0.3% -8.0
IHS Global Insight --- 4.78 --- ---
Informa Global Markets 410 4.80 --- -10.0
ING Financial Markets --- 4.95 0.3% -6.0
Insight Economics 405 4.95 0.3% -10.0
Intesa-SanPaulo --- 5.00 --- -7.0
J.P. Morgan Chase 405 4.90 --- ---
Janney Montgomery Scott --- 4.94 0.3% ---
Jefferies & Co. --- 4.90 --- -5.0
Landesbank Berlin 410 4.98 0.3% -5.0
Landesbank BW --- 4.95 --- -7.0
Manulife Asset Management 400 5.00 --- ---
Maria Fiorini Ramirez 400 4.95 0.3% ---
Market Securities --- 4.82 0.3% ---
MET Capital Advisors --- 5.00 --- ---
MF Global 410 4.96 0.2% -10.0
Mizuho Securities 420 4.86 0.2% -10.0
Moody’s Analytics 410 4.88 0.3% -16.5
Morgan Keegan & Co. --- --- 0.0% ---
Morgan Stanley & Co. 395 5.00 0.3% ---
National Bank Financial --- 4.85 --- ---
Natixis --- 4.95 --- ---
Nomura Securities --- 4.91 0.2% -9.9
Nord/LB 400 --- 0.2% -5.0
OSK Group/DMG --- 4.92 --- ---
Parthenon Group 403 4.84 0.5% -9.6
Pierpont Securities 400 4.90 --- ---
PNC Bank --- 4.85 -0.1% ---
Raiffeisenbank International --- 4.90 --- ---
Raymond James 405 4.95 0.3% -8.0
RBC Capital Markets 398 5.00 --- -8.0
RBS Securities 390 4.90 --- ---
Scotia Capital 400 4.80 --- -10.0
SMBC Nikko Securities --- 4.80 0.3% -5.0
Societe Generale 397 4.93 --- -12.8
Standard Chartered 400 4.88 --- -7.5
State Street Global Markets 401 4.94 0.2% -9.1
Stone & McCarthy Research 406 4.90 0.3% -16.1
TD Securities 390 4.95 0.4% 1.0
UBS 400 4.85 0.3% -5.0
UniCredit Research --- --- 0.3% ---
University of Maryland 405 4.95 0.2% -9.0
Wells Fargo & Co. --- 4.94 0.2% ---
WestLB AG --- 4.90 0.3% -10.0
Westpac Banking Co. 410 4.93 0.3% -10.0
Wrightson ICAP 400 5.00 0.2% -15.0
===============================================================
To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net;
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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