Sales of Previously Owned U.S. Homes Probably Declined in May
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
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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
June 21 (Bloomberg) -- Michelle Meyer, a senior economist at Bank of America Merrill Lynch, talks about the outlook for the U.S. economy and housing market recovery. Meyer speaks with Tom Keene, Sara Eisen and Ken Prewitt on Bloomberg Television's "Surveillance." (Source: Bloomberg)
June 20 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke says the central bank is "prepared to do what's necessary" to support the economy. He speaks at a news conference in Washington. (This is an excerpt. Source: Bloomberg)
Sales of Previously Owned U.S. Homes Probably Declined in May
Matthew Staver/Bloomberg
A "New Price" sign stands outside a previously owned home, in Denver, Colorado.
A "New Price" sign stands outside a previously owned home, in Denver, Colorado. Photographer: Matthew Staver/Bloomberg
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