Sales of New U.S. Homes Probably Climbed in March

Sales of new homes probably increased in March for the first time in three months, indicating the market is struggling to stabilize, economists said before a report today.

Purchases rose to a 318,000 annual rate, up 1.6 percent from 313,000 in February, according to the median estimate in a Bloomberg News survey of 77 economists. Other reports may show consumer confidence dropped for a second month and home prices decreased at a slower pace.

Residential real estate remains a soft spot in the economy, challenged by stricter lending standards and more foreclosures, which depress property values. At the same time, an improved labor market and mortgage rates near historic lows may help prevent the market from slipping further.

“The long-term trend is generally improvement but it’s not going anywhere fast,” said David Blitzer, managing director and chairman of the index committee at Standard & Poor’s, which produces the S&P/Case-Shiller home-price gauge. “We’ve some slightly better numbers in the last few months on starts and sales, but definitely not on prices.”

Economist estimates for March sales in the Bloomberg survey ranged from 300,000 to 337,000. The report from the Commerce Department is due at 10 a.m. New York time.

At 9 a.m., the latest calculations from S&P/Case-Shiller may show property values in 20 U.S. cities fell 3.4 percent in the year ended February, the smallest 12-month drop since January 2011, the Bloomberg survey showed.

Less Confident

The Conference Board’s measure of consumer confidence decreased to 69.7 in April from 70.2 the prior month, according to the median forecast of economists surveyed. The measure reached a one-year high of 71.6 in February. The report from the New York-based research group is due at 10 a.m.

New-home purchases, which are counted when contracts are signed, accounted for 6.7 percent of the residential real-estate market last year. The February pace was the lowest since October.

Builder confidence fell in April for the first time in seven months, a report showed last week. The National Association of Homebuilders/Well Fargo sentiment gauge dropped to 25 from 28 in March. Readings less than 50 mean there were more negative than positive responses. The measure had been as low as 14 in September.

Indications that demand may be stabilizing has boosted builder shares. The S&P Supercomposite Homebuilding Index has climbed 20 percent so far this year, compared with an 8.7 percent gain for the broader 500 Index.

Recent Decrease

Existing home sales, which are counted when a transaction is closed, lost ground in March for a second month, dropping 2.6 percent to a 4.48 million annual rate, the National Association of Realtors reported last week.

In 2011, 4.26 million existing homes changed hands, up 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.

Interest rates remain low. The average rate on a 30-year fixed mortgage, which rose to 3.90 percent last week, remains close to the record-low of 3.87 percent reached in February, according to Freddie Mac (FMCC) data.

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. Central bankers meet today and tomorrow to determine the course of policy.

Supplies in Demand

Construction suppliers are among the companies that stand to benefit from strength in housing.

At paint manufacturer Sherwin-Williams Co., strong demand led to the company’s highest volume of first-quarter sales since 2004, Chief Executive Officer Christopher Connor said on an April 19 earnings call.

“We do take great comfort in all the anecdotal conversations that we have with thousands and thousands of painting contractors in our stores every day,” Connor said. They are hiring crews and purchasing the kinds of equipment and supplies that points to a pickup in demand, he said.

                        Bloomberg Survey

================================================================
                         Case Shil Consumer New Home New Home
                           Monthly     Conf    Sales    Sales
                              YOY%    Index   ,000’s     MOM%
================================================================

Date of Release              04/24    04/24    04/24    04/24
Observation Period            Feb.    April    March    March
----------------------------------------------------------------
Median                       -3.4%     69.7      318     1.6%
Average                      -3.4%     69.8      318     1.6%
High Forecast                -2.9%     74.0      337     7.7%
Low Forecast                 -3.8%     67.0      300    -4.2%
Number of Participants          31       73       77       77
Previous                     -3.8%     70.2      313    -1.6%
----------------------------------------------------------------
4CAST                        -3.1%     68.5      320     2.2%
ABN Amro                      ---      70.0      321     2.5%
Action Economics              ---      70.0      318     1.6%
Aletti Gestielle              ---      69.8      318     1.6%
Ameriprise Financial          ---      70.0      318     1.6%
Analytical Synthesis         -3.2%     ---       315     0.6%
Banca Aletti                  ---      69.5      320     2.2%
Bank of Tokyo-Mitsubishi      ---      68.0      320     2.2%
Bantleon Bank AG              ---      68.5      330     5.4%
Barclays Capital             -3.2%     69.0      316     1.0%
Bayerische Landesbank         ---      70.5     ---      ---
BBVA                         -3.6%     70.0      315     0.6%
BMO Capital Markets          -3.2%     69.0      318     1.6%
BNP Paribas                   ---      68.0      325     3.8%
BofA Merrill Lynch            ---      69.0      315     0.6%
Briefing.com                 -3.4%     71.0      320     2.2%
Capital Economics            -3.0%     68.0      315     0.6%
CIBC World Markets            ---      ---       322     2.9%
Citi                          ---      70.0      310    -1.0%
ClearView Economics           ---      ---       320     2.2%
Comerica                      ---      69.0      305    -2.6%
Commerzbank AG               -3.5%     68.0      320     2.2%
Credit Agricole CIB           ---      69.7      315     0.6%
Credit Suisse                 ---      72.0      315     0.6%
Daiwa Securities America      ---      68.0      325     3.8%
Danske Bank                   ---      68.8      316     1.0%
DekaBank                      ---      71.0      320     2.2%
Desjardins Group             -3.6%     69.5      315     0.6%
Deutsche Bank Securities      ---      70.0      300    -4.2%
Deutsche Postbank AG          ---      69.5     ---      ---
DZ Bank                      -3.6%     69.5      318     1.6%
Exane                         ---      70.0      330     5.4%
Fact & Opinion Economics     -3.3%     69.0      318     1.6%
First Trust Advisors          ---      71.4      325     3.8%
FTN Financial                 ---      69.0      300    -4.2%
Helaba                        ---      69.0      325     3.8%
High Frequency Economics      ---      70.2      330     5.4%
HSBC Markets                 -3.4%     74.0      305    -2.6%
Hugh Johnson Advisors         ---      71.0      320     2.2%
IDEAglobal                   -3.5%     72.0      325     3.8%
IHS Global Insight           -3.7%     74.0      337     7.7%
Informa Global Markets        ---      69.5      305    -2.6%
ING Financial Markets         ---      71.0     ---      ---
Insight Economics            -3.6%     70.0      310    -1.0%
Intesa Sanpaulo               ---      68.5      325     3.8%
J.P. Morgan Chase            -3.3%     ---       320     2.2%
Janney Montgomery Scott      -3.3%     70.6      311    -0.6%
Jefferies & Co.               ---      71.5      315     0.6%
Landesbank Berlin             ---      68.0      320     2.2%
Landesbank BW                 ---      69.8      310    -1.0%
Market Securities            -3.2%     ---       326     4.2%
MET Capital Advisors          ---      ---       312    -0.3%
Mizuho Securities            -3.3%     69.0      310    -1.0%
Moody’s Analytics             ---      70.5      328     4.8%
Morgan Stanley & Co.          ---      70.0      330     5.4%
National Bank Financial       ---      69.5      315     0.6%
Natixis                      -3.6%     68.0      310    -1.0%
Newedge                       ---      71.0     ---      ---
Nomura Securities            -3.1%     71.2      335     7.0%
Nord/LB                       ---      ---       315     0.6%
OSK Group/DMG                 ---      ---       331     5.8%
O’Sullivan                    ---      69.5      325     3.8%
Parthenon Group              -3.2%     71.7      306    -2.2%
Pierpont Securities           ---      68.5      325     3.8%
PineBridge Investments        ---      71.0      305    -2.5%
PNC Bank                      ---      69.0      320     2.2%
Raymond James                -3.4%     68.5      325     3.8%
RBC Capital Markets           ---      68.0      330     5.4%
RBS Securities                ---      70.0      320     2.2%
Scotia Capital                ---      69.5      310    -1.0%
Second Order Strategies      -2.9%     ---      ---      ---
SMBC Nikko Securities        -3.5%     72.0      300    -4.2%
Societe Generale             -3.3%     ---       313     0.0%
Standard Chartered           -3.8%     67.5      309    -1.3%
Stone & McCarthy Research     ---      71.0      316     1.0%
TD Securities                -3.4%     68.6      331     5.8%
UBS                          -3.1%     71.5      320     2.2%
Union Investment              ---      70.0     ---      ---
University of Maryland       -3.7%     70.2      310    -1.0%
Wells Fargo & Co.             ---      68.8      320     2.2%
WestLB AG                    -3.5%     69.5      320     2.2%
Westpac Banking Co.           ---      67.0      310    -1.0%
Wrightson ICAP                ---      70.0      325     3.8%
================================================================

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 at cwellisz@bloomberg.net.

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