U.S. Existing-Home Sales Probably Rose
Sales of previously owned U.S. homes probably increased in March as a drop in mortgage rates propelled demand to its strongest quarter in almost two years.
Purchases climbed 0.7 percent to a 4.62 million annual rate from 4.59 million in February, according to the median estimate of 72 economists in a Bloomberg News survey. Sales in the first three months of the year would average 4.61 million at an annual pace, the best since April through June 2010. Jobless claims declined last week, other data may show.
An improved labor market, mortgage rates near historic lows and cheaper properties are shoring up an industry that’s been the economy’s soft spot. At the same time, further progress in residential real estate is being challenged by distressed properties and the threat of more foreclosures.
“Better jobs, better income, better affordability and lower mortgage rates mean you will sell more homes,” said Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh.
The National Association of Realtors’ data are due at 10 a.m. in Washington. Economists’ estimates range from 4.5 million to 4.75 million.
Existing-home sales, tabulated when a contract closes, climbed to 4.26 million last year, from 4.19 million in 2010. Demand peaked at 7.1 million in 2005 during the housing boom. In 2008, sales totaled 4.1 million, the least since 1995.
Warmer Weather
Purchases in the first three months of 2012 may have benefited from warmer weather, which put more Americans in the mood to go house-hunting. The average temperature was 51.1 degrees Fahrenheit (10.6 degrees Celsius) last month, 8.6 degrees warmer than the 20th century average for March, according to the National Oceanic and Atmospheric Administration. The first quarter of 2012 was the warmest since record-keeping began in 1895.
Lower borrowing costs are doing their part as well. The average rate on a 30-year fixed mortgage fell to 3.88 percent last week, close to the record-low of 3.87 percent reached in February, according to data from Freddie Mac.
Mortgage revenue helped Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), the two most-profitable banks last year, top first- quarter estimates, the companies reported this month.
“On the housing side, we’re seeing improvement, and we’ve been seeing that for some time, but we’re seeing it more,” Wells Fargo Chairman and Chief Executive Officer John Stumpf said in an April 13 earnings call.
Seeing Improvement
“When you have the dynamics of higher rental rates and lower home values at great financing rates, there’s a point in time where the market’s going to clear and you’re going to see improvement,” Stumpf said. “We’re getting very close to that tipping point.”
Homebuilder shares have outperformed the broader stock market this year. The Standard & Poor’s Supercomposite Homebuilder Index (S15HOME) of 11 builders has gained 21 percent, compared with a 10 percent increase for the broader S&P 500.
A report at 8:30 a.m. may show the labor market is also conducive to stabilization in housing. First-time filings for unemployment benefits dropped to 370,000 last week from 380,000, according to the median estimate in a Bloomberg survey before the Labor Department’s figures.
The improvement in real estate has been uneven as recent reports have shown. More than three years after the 2008 subprime credit collapse drove many lenders from the mortgage market, home loans remain difficult to get for some.
Home Starts
Home starts slowed in March to a five-month low, the Commerce Department said this week. Beginning construction dropped 5.8 percent during the month.
Confidence among U.S. homebuilders decreased to a three- month low in April. The National Association of Home Builders/Wells Fargo index fell to 25 from 28 in March, the Washington-based group said on April 16. Readings below 50 mean more respondents said conditions were poor.
To help hold down borrowing costs like mortgage rates, Federal Reserve policy makers last month said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist. The program is scheduled to come to a close by the end of June.
Bloomberg Survey
====================================================
Initial Exist Exist
Claims Homes Homes
,000’s Mlns MOM%
====================================================
Date of Release 04/19 04/19 04/19
Observation Period 14-Apr March March
----------------------------------------------------
Median 370 4.62 0.7%
Average 370 4.62 0.6%
High Forecast 390 4.75 3.5%
Low Forecast 350 4.50 -2.0%
Number of Participants 47 72 72
Previous 380 4.59 -0.9%
----------------------------------------------------
4CAST 372 4.65 1.3%
ABN Amro --- 4.61 0.5%
Action Economics 355 4.75 3.5%
Aletti Gestielle --- 4.63 0.9%
Ameriprise Financial 375 4.63 0.9%
Analytical Synthesis --- 4.65 1.3%
Banca Aletti 375 4.65 1.3%
Bank of Tokyo-Mitsubishi 365 4.60 0.2%
Bantleon Bank AG --- 4.60 0.2%
Barclays Capital 375 4.64 1.1%
BBVA 375 4.65 1.3%
BMO Capital Markets 366 4.70 2.4%
BNP Paribas 365 4.60 0.2%
BofA Merrill Lynch 370 4.50 -2.0%
Briefing.com 375 4.68 2.0%
Capital Economics --- 4.65 1.3%
CIBC World Markets --- 4.65 1.3%
Citi 370 4.65 1.3%
ClearView Economics --- 4.65 1.3%
Comerica --- 4.65 1.3%
Commerzbank AG 385 4.55 -0.9%
Credit Agricole CIB --- 4.63 0.9%
Credit Suisse 365 --- ---
Daiwa Securities America --- 4.60 0.2%
Danske Bank --- 4.61 0.4%
DekaBank --- 4.60 0.2%
Desjardins Group 360 4.55 -0.9%
Deutsche Bank Securities 390 4.65 1.3%
Exane --- 4.59 0.0%
Fact & Opinion Economics 375 4.61 0.4%
First Trust Advisors 372 4.64 1.1%
FTN Financial --- 4.61 0.4%
Helaba 365 4.60 0.2%
High Frequency Economics 390 4.70 2.4%
HSBC Markets 366 4.62 0.7%
Hugh Johnson Advisors 370 4.50 -2.0%
IDEAglobal 365 4.75 3.5%
IHS Global Insight --- 4.62 0.7%
Informa Global Markets 365 4.55 -0.9%
ING Financial Markets 355 --- ---
Insight Economics 360 4.65 1.3%
Intesa Sanpaulo --- 4.60 0.2%
J.P. Morgan Chase 375 4.55 -0.9%
Janney Montgomery Scott --- 4.58 -0.2%
Jefferies & Co. 385 4.60 0.2%
Landesbank Berlin 370 4.60 0.2%
Landesbank BW --- 4.65 1.3%
Market Securities --- 4.55 -0.9%
MET Capital Advisors --- 4.60 0.2%
Mizuho Securities 370 4.57 -0.5%
Moody’s Analytics 375 4.67 1.7%
Morgan Stanley & Co. --- 4.60 0.2%
National Bank Financial --- 4.59 0.0%
Natixis --- 4.64 1.1%
Nomura Securities --- 4.60 0.2%
Nord/LB 370 --- ---
OSK Group/DMG --- 4.62 0.7%
O’Sullivan 370 --- ---
Parthenon Group 358 4.63 0.9%
Pierpont Securities 375 4.55 -0.9%
PineBridge Investments 378 4.75 3.5%
PNC Bank --- 4.65 1.3%
Raymond James 355 4.62 0.7%
RBC Capital Markets 355 4.50 -2.0%
RBS Securities 380 4.65 1.3%
Scotia Capital --- 4.60 0.2%
Societe Generale 350 4.65 1.3%
Standard Chartered 380 4.55 -0.9%
Stone & McCarthy Research 380 4.62 0.7%
TD Securities 370 4.63 0.9%
UBS 370 4.62 0.7%
University of Maryland 360 4.58 -0.3%
Wells Fargo & Co. --- 4.61 0.4%
WestLB AG --- 4.65 1.3%
Westpac Banking Co. 375 4.57 -0.5%
Wrightson ICAP 375 4.59 0.0%
====================================================
To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net.
Sales of Previously Owned U.S. Homes Probably Climbed in March
Andrew Harrer/Bloomberg
Potential homebuyers Cindy Cho, right, and Bob Wood look through a five-bedroom row house for sale in the Logan Circle neighborhood of Washington.
Potential homebuyers Cindy Cho, right, and Bob Wood look through a five-bedroom row house for sale in the Logan Circle neighborhood of Washington. Photographer: Andrew Harrer/Bloomberg
April 18 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner talks about the outlook for the U.S. economy, tax reform and China's currency policy. He speaks at the Brookings Institution in Washington. David Ignatius of the Washington Post, moderates the discussion. (Source: Bloomberg)
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.