Sales of New Homes in U.S. Probably Climbed for Second Month

Sales of New Homes in U.S. Rose More Than Forecast
Purchases of new houses in the U.S. rose more than forecast in December. Photographer: Tim Boyle/Bloomberg

Purchases of new houses in the U.S. probably rose in December for a second month as the industry struggled to stabilize near record lows, economists said before a report today.

Sales, tabulated when contracts are signed, climbed 3.5 percent to 300,000 annual pace, according to the median estimate in a Bloomberg News survey of 79 economists. The 274,000 rate in August was the weakest in data going back to 1963.

Builders may keep facing competition from a growing glut of foreclosed homes that is depressing prices. The lack of a sustained housing rebound and unemployment above 9 percent are among reasons Federal Reserve policy makers today are expected to press on with a second round of stimulus that will pump $600 billion into financial markets by June.

“It’s very hard for new-home sales to compete when buyers are getting good bargains on distressed houses,” said Michelle Meyer, senior U.S. economist with Bank of America Merrill Lynch Global Research in New York. “Housing is going to stand out as the weak spot in the economy for a while. The Fed remains concerned about it.”

The Commerce Department report is due at 10 a.m. in Washington. Economists’ forecasts ranged from 270,000 to 315,000, after a 290,000 rate in November.

Previously owned home purchases jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing costs up even more, figures from the National Association of Realtors showed last week. Existing house purchases are calculated when a contract closes.

Leading Indicator

New-home sales are considered a more timely barometer than purchases of previously owned homes, which account for about 90 percent of the housing market.

Housing demand see-sawed last year, reflecting a boost from a homebuyer tax incentive of as much as $8,000 that gave way to a plunge in sales by mid-2010 after the credit ended.

With sales yet to show sustained strength, builders have cut back on the new-home supply. Housing starts fell in December to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed last week.

An unemployment rate that is forecast to average more than 9 percent again this year signals some homeowners will keep having trouble meeting mortgage payments, leading to an increase in distressed properties. The number of homes getting a foreclosure filing will rise about 20 percent this year, reaching a peak for the housing crisis, said RealtyTrac Inc., an Irvine, California-based data seller.

Prices Fall

Prices remain under pressure, hurting homeowner equity while at the same time improving affordability. The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from the prior year, the biggest 12-month decrease since December 2009, a report from the group showed yesterday.

The S&P Supercomposite Homebuilder Index, which includes Toll Brothers Inc. and Lennar Corp., rose 2.3 percent in 2010, compared with a 13 percent gain in the S&P 500 Index.

Horsham, Pennsylvania-based Toll, the largest U.S. luxury-home builder, is among companies concerned about foreclosures in markets like Las Vegas and Phoenix, even as it is “optimistic” about the upcoming spring selling season, according to Martin Connor, chief financial officer.

“I don’t think it’s quite turned the corner yet,” Connor said in a Bloomberg Television interview on Jan. 5, referring to the housing industry. Still, general positive economic news including an increase in retail sales “bodes well for the housing market,” he said.

While signs such as improving consumer confidence indicate the world’s largest economy is gaining speed, Fed Chairman Ben S. Bernanke and his fellow policy makers will likely complete the second round of quantitative easing to keep borrowing costs low and spur growth. Their statement is due at around 2:15 p.m. Washington time.

               Bloomberg Survey

                          New Home New Home
                             Sales    Sales
                            ,000’s     MOM%
Date of Release              01/26    01/26
Observation Period            Dec.     Dec.
Median                         300     3.5%
Average                        297     2.5%
High Forecast                  315     8.6%
Low Forecast                   270    -6.9%
Number of Participants          79       79
Previous                       290     5.5%
4CAST Ltd.                     295     1.7%
Action Economics               300     3.5%
Aletti Gestielle               300     3.5%
Ameriprise Financial           300     3.5%
Banesto                        298     2.8%
Bank of Tokyo- Mitsubishi      300     3.5%
Bantleon Bank AG               310     6.9%
Barclays Capital               295     1.7%
BBVA                           310     6.9%
BMO Capital Markets            305     5.2%
BNP Paribas                    300     3.5%
BofA Merrill Lynch Research    295     1.7%                   280    -3.5%
Capital Economics              310     6.9%
CIBC World Markets             290     0.0%
Citi                           300     3.5%
ClearView Economics            300     3.5%
Commerzbank AG                 300     3.5%
Credit Agricole CIB            300     3.5%
Credit Suisse                  300     3.5%
Daiwa Securities America       300     3.5%
Danske Bank                    285    -1.7%
DekaBank                       300     3.5%
Desjardins Group               290     0.0%
Deutsche Bank Securities       285    -1.7%
DZ Bank                        310     6.9%
Fact & Opinion Economics       270    -6.9%
First Trust Advisors           292     0.7%
FTN Financial                  300     3.5%
Goldman, Sachs & Co.           290     0.0%
Helaba                         310     6.9%
High Frequency Economics       290     0.0%
Horizon Investments            290     0.0%
HSBC Markets                   305     5.2%
Hugh Johnson Advisors          290     0.0%
IDEAglobal                     300     3.5%
IHS Global Insight             298     2.8%
Informa Global Markets         305     5.2%
ING Financial Markets          310     6.9%
Insight Economics              305     5.2%
Intesa-SanPaulo                300     3.5%
J.P. Morgan Chase              290     0.0%
Janney Montgomery Scott        295     1.7%
Jefferies & Co.                275    -5.2%
Landesbank Berlin              300     3.5%
Landesbank BW                  305     5.2%
Manulife Asset Management      305     5.2%
Maria Fiorini Ramirez          295     1.7%
MET Capital Advisors           285    -1.7%
MF Global                      280    -3.5%
Mizuho Securities              287    -1.0%
Moody’s Analytics              306     5.5%
Morgan Keegan & Co.            287    -1.0%
Morgan Stanley & Co.           300     3.5%
National Bank Financial        305     5.2%
Natixis                        300     3.5%
Nomura Securities Intl.        300     3.5%
OSK Group/DMG                  305     5.2%
Pierian Capital                315     8.6%
Pierpont Securities LLC        275    -5.2%
PineBridge Investments         287    -1.0%
PNC Bank                       310     6.9%
Raymond James                  300     3.5%
RBC Capital Markets            305     5.2%
RBS Securities Inc.            300     3.5%
Scotia Capital                 280    -3.5%
Societe Generale               276    -4.8%
Standard Chartered             300     3.5%
State Street Global Markets    296     2.1%
Stone & McCarthy Research      300     3.5%
TD Securities                  310     6.9%
Thomson Reuters/IFR            295     1.7%
UBS                            310     6.9%
UniCredit Research             300     3.5%
University of Maryland         300     3.5%
Wells Fargo & Co.              304     4.8%
WestLB AG                      300     3.5%
Westpac Banking Co.            281    -3.0%
Wrightson ICAP                 310     6.9%
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