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Sales of Previously Owned U.S. Homes Probably Declined in May

Photographer: David Paul Morris/Bloomberg

Bella Casa Home Staging removes a couch from a condo for sale in San Francisco. Close

Bella Casa Home Staging removes a couch from a condo for sale in San Francisco.

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Photographer: David Paul Morris/Bloomberg

Bella Casa Home Staging removes a couch from a condo for sale in San Francisco.

Sales of previously owned U.S. homes probably fell in May, showing an uneven recovery in residential real estate, economists said a report may show today.

Purchases dropped 1.1 percent to a 4.57 million annual rate last month, according to the median forecast of 74 economists surveyed by Bloomberg News. Jobless claims last week were little changed, other data may show.

The weakest employment gain in a year last month along with limited access to credit are restraints on an industry that’s been supported by record-low borrowing costs and a drop home values. The figures underscore Federal Reserve Chairman Ben S. Bernanke’s comments that the economy is failing to get a boost from a more typical real-estate recovery.

“The housing market is recovering very slowly,” said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York. “I do see a pickup in demand throughout the year but it’s going to be very gradual. What we need to see probably is continued low mortgage rates. That will gradually continue to improve housing demand.”

The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.4 million to 4.73 million.

Existing-home sales, which are tabulated when a contract closes, have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.

Labor Market

Limited job growth may be weighing on housing. Employers added 69,000 positions in May, the fewest in 12 months, according to Labor Department figures. The jobless rate climbed to 8.2 percent from April’s 8.1 percent.

First-time applications for unemployment benefits fell to 383,000 last week from 386,000 in the prior period, according to the Bloomberg survey median before Labor Department figures at 8:30 a.m. Jobless claims are close to a high this year of 392,000, reached in April.

Home prices have shown few signs of strengthening as foreclosures put more properties on the market. Foreclosure starts grew in May for the first time since January 2010, after the largest U.S. loan servicers settled with states over faulty documentation, according to a report last week from RealtyTrac Inc., a real estate data provider in Irvine, California.

“Be careful of the signals that you’re translating into recovery because they’re not very strong,” said Michael Feder, chief executive officer of Radar Logic Inc. in New York, which tracks home prices. “Some of the signs of an early spring recovery were actually the result of a mild winter in some markets and some investor buying.”

Housing Affordability

Cheaper properties and lower mortgage rates pushed up homebuyer affordability to a record in the first quarter, according to the NAR. The average rate on a 30-year fixed mortgage dropped to a record-low 3.67 percent in the first week of June, according to figures from Freddie Mac.

New Jersey-based builder Hovnanian Enterprises Inc. (HOV) is among companies that are more upbeat. The company reported a 52 percent increase in contracts in the second quarter compared with last year.

“It doesn’t feel like a head fake this year, it feels like it’s beginning of a recovery, so we’re very encouraged with what we’ve been seeing,” said Larry Sorsby, chief financial officer, said at a June 13 conference.

The Standard & Poor’s Supercomposite Homebuilding Index has advanced 34 percent since the end of last year, more than the 7.8 percent gain in the broader S&P 500.

“There are some good signs in housing, but nevertheless we are not getting the size of the boost, the amount of help in the recovery we would normally get from a housing recovery,” Bernanke said yesterday at a press conference in Washington after the Fed announced it would extend a program aimed at bolstering the economy.

“Access to credit is a major issue” for some Americans wanting to buy a home, Bernanke said. “Mortgage access is much tighter than it has been for a long time. What that does, to some extent, is it mutes the impact of the Fed’s actions.”

                        Bloomberg Survey

================================================================
                           Initial    Cont.    Exist    Exist
                            Claims   Claims    Homes    Homes
                            ,000’s   ,000’s     Mlns     MOM%
================================================================

Date of Release              06/21    06/21    06/21    06/21
Observation Period          16-Jun    9-Jun      May      May
----------------------------------------------------------------
Median                         383     3278     4.57    -1.1%
Average                        382     3273     4.57    -1.1%
High Forecast                  390     3300     4.73     2.4%
Low Forecast                   371     3220     4.40    -4.8%
Number of Participants          45       14       74       74
Previous                       386     3278     4.62     3.4%
----------------------------------------------------------------
4CAST                          384     ---      4.55    -1.5%
ABN Amro                       386     ---      4.55    -1.5%
Action Economics               380     3270     4.68     1.3%
Aletti Gestielle              ---      ---      4.58    -0.9%
Ameriprise Financial          ---      ---      4.63     0.1%
Analytical Synthesis          ---      ---      4.61    -0.2%
Banca Aletti                   388     ---      4.53    -2.0%
Bantleon Bank AG              ---      ---      4.55    -1.5%
Barclays                       385     ---      4.53    -2.0%
BBVA                           380     3280     4.65     0.7%
BMO Capital Markets            383     3285     4.54    -1.7%
BNP Paribas                    385     ---      4.60    -0.4%
BofA Merrill Lynch             385     ---      4.55    -1.5%
Briefing.com                   380     3250     4.50    -2.6%
Capital Economics             ---      ---      4.60    -0.4%
CIBC World Markets            ---      ---      4.52    -2.2%
Citi                           385     3280     4.60    -0.4%
ClearView Economics           ---      ---      4.60    -0.4%
Comerica                      ---      ---      4.50    -2.6%
Commerzbank AG                ---      ---      4.60    -0.4%
Credit Agricole CIB           ---      ---      4.56    -1.3%
Credit Suisse                  385     ---      4.55    -1.5%
Daiwa Securities America      ---      ---      4.60    -0.4%
Danske Bank                   ---      ---      4.63     0.2%
DekaBank                      ---      ---      4.55    -1.5%
Desjardins Group               380     ---      4.50    -2.6%
Deutsche Bank Securities       385     ---      4.50    -2.6%
Exane                         ---      ---      4.55    -1.5%
Fact & Opinion Economics       382     ---      4.55    -1.5%
First Trust Advisors           383     ---      4.52    -2.2%
FTN Financial                 ---      ---      4.56    -1.3%
Goldman, Sachs & Co.          ---      ---      4.58    -1.0%
Helaba                         380     ---      4.60    -0.4%
HSBC Markets                   387     3285     4.52    -2.2%
Hugh Johnson Advisors          380     ---      4.50    -2.6%
IDEAglobal                     375     ---      4.55    -1.5%
IHS Global Insight            ---      ---      4.60    -0.4%
Informa Global Markets         380     3220     4.60    -0.4%
ING Financial Markets          371     3265     4.60    -0.4%
Intesa Sanpaulo               ---      ---      4.60    -0.4%
J.P. Morgan Chase              385     ---      4.55    -1.5%
Janney Montgomery Scott       ---      ---      4.60    -0.4%
Jefferies & Co.                385     ---      4.60    -0.4%
John Hancock Financial         377     3258     4.67     1.1%
Landesbank Berlin              380     ---      4.45    -3.7%
Landesbank BW                 ---      ---      4.60    -0.4%
Maria Fiorini Ramirez          385     ---      4.57    -1.1%
Market Securities             ---      ---      4.71     2.0%
MET Capital Advisors          ---      ---      4.62     0.0%
Mizuho Securities              380     ---      4.67     1.0%
Moody’s Analytics              385     3295     4.54    -1.7%
National Bank Financial       ---      ---      4.60    -0.4%
Natixis                       ---      ---      4.57    -1.1%
Nomura Securities             ---      ---      4.57    -1.2%
Nord/LB                        380     ---      ---      ---
OSK Group/DMG                 ---      ---      4.59    -0.7%
Parthenon Group                379     ---      4.63     0.2%
Pierpont Securities            383     ---      4.45    -3.7%
PineBridge Investments         375     ---      4.69     1.5%
PNC Bank                      ---      ---      4.60    -0.4%
Raiffeisenbank International  ---      ---      4.45    -3.7%
RBC Capital Markets            384     ---      4.50    -2.6%
RBS Securities                 388     ---      4.55    -1.5%
Scotiabank                     380     3275     4.57    -1.1%
SMBC Nikko Securities         ---      ---      4.60    -0.4%
Societe Generale               378     3285     4.73     2.4%
Southern Polytechnic State     373     ---      ---      ---
Standard Chartered             380     ---      4.50    -2.6%
Stone & McCarthy Research      388     ---      4.50    -2.6%
TD Securities                  390     3275     4.61    -0.2%
UBS                            380     ---      4.59    -0.8%
UniCredit Research            ---      ---      4.40    -4.8%
University of Maryland         380     ---      4.58    -1.0%
Wells Fargo                   ---      ---      4.61    -0.2%
Westpac Banking                390     ---      4.57    -1.1%
Wrightson ICAP                 385     3300     4.57    -1.1%
================================================================

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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