Sales of New Homes in U.S. Probably Climbed From Record Low

Sales of New Homes in U.S. Probably Climbed From Record Low
New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes. Photographer: Jim R. Bounds/Bloomberg

Purchases of new houses in the U.S. probably rose in March from a record low, economists said a report today will show.

New-home sales, tabulated when contracts are signed, climbed 12 percent to a 280,000 annual pace last month, according to the median estimate in a Bloomberg News survey of 64 economists. Purchases slumped 17 percent in February to a 250,000 rate, the weakest in data going back to 1963.

“A housing recovery is going to be slow,” said Michael Gapen, a senior U.S. economist at Barclays Capital Inc. in New York. “I see light at the end of the tunnel, but I see a lot more tunnel. We still have tight credit conditions, and we need plain, outright job growth to spur demand.”

The market for new homes faces competition from a glut of foreclosed properties that may keep prices depressed through the year, discouraging new construction. Housing’s struggles help explain why the Federal Reserve may announce at the conclusion of this week’s policy meeting that it plans to complete the purchase of $600 billion of Treasuries by June.

The Commerce Department report is due at 10 a.m. in Washington. Economists’ forecasts ranged from 247,000 to 300,000.

Purchases of previously owned homes climbed 3.7 percent to a 5.1 million annual rate in March as properties in or near foreclosure lured investors, a National Association of Realtors report showed April 20. All-cash deals accounted for 35 percent of the transactions, the most on record, while distressed properties including foreclosures and short sales made up 40 percent of all deals, the group said.

More Timely

New-home sales are considered a more timely barometer than purchases of previously owned homes, which are calculated when a contract closes. Resales account for about 95 percent of the housing market so far this year.

Housing demand gyrated in 2010 as a boost from a homebuyer tax incentive of as much as $8,000 gave way to a mid-year plunge after the credit ended.

The lack of demand is keeping builders pessimistic. The National Association of Home Builders’ confidence index fell to 16 this month from 17 in March. A reading under 50 means a majority of builders view conditions as poor.

The S&P Supercomposite Homebuilder Index, which includes Toll Brothers Inc. and Lennar Corp., has climbed 1.3 percent this year, trailing a 6.3 percent gain in the broader S&P 500 Index.

Orders Slump

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, reported a bigger-than-expected loss for the quarter ended Feb. 28 as orders plunged.

“A sustained, broad-based housing recovery will not occur until we start to experience material job creation,” Chief Executive Officer Jeffrey Mezger said during a conference call with analysts on April 5.

An unemployment rate projected to average 8.7 percent in 2011, according to a Bloomberg survey earlier this month, may force more owners into distress. Foreclosure filings will climb about 20 percent in 2011, reaching a peak for the housing crisis, according to a forecast in January from RealtyTrac Inc., an Irvine, California-based data seller.

The housing market was either “little changed from low levels” or weaker across the country, the Fed said in its Beige Book report on April 13. The lack of a sustained housing rebound is among reasons policy makers will complete their $600 billion asset purchase plan and hold borrowing costs near zero.

Central bankers conclude a two-day policy meeting on April 27. At their March 15 meeting, officials said in their statement that the “housing sector continues to be depressed.”

                        Bloomberg Survey

4/22/2011         New Home New Home
                     Sales    Sales
                    ,000’s     MOM%

Date of Release      04/25    04/25
Observation          March    March
Median                 280    12.0%
Average                280    12.2%
High Forecast          300    20.0%
Low Forecast           247    -1.2%
# of replies            64       64
Previous               250   -16.9%
4/22/2011         New Home New Home
                     Sales    Sales
                    ,000’s     MOM%
4CAST Ltd.             288    15.2%
ABN Amro Inc.          275    10.0%
Action Economics       280    12.0%
Aletti Gestielle       280    12.0%
Ameriprise Financ      275    10.0%
Bank of Tokyo- Mi      270     8.0%
Bantleon Bank AG       290    16.0%
Barclays Capital       270     8.0%
BBVA                   262     4.8%
BMO Capital Marke      280    12.0%
BNP Paribas            290    16.0%
BofA Merrill Lync      285    14.0%           265     6.0%
Capital Economics      275    10.0%
CIBC World Market      275    10.0%
Citi                   290    16.0%
4/22/2011         New Home New Home
                     Sales    Sales
                    ,000’s     MOM%
ClearView Economi      280    12.0%
Commerzbank AG         275    10.0%
Credit Agricole C      275    10.0%
Credit Suisse          270     8.0%
Daiwa Securities       280    12.0%
DekaBank               290    16.0%
Desjardins Group       290    16.0%
Deutsche Bank Sec      275    10.0%
DZ Bank                260     4.0%
First Trust Advis      275    10.0%
FTN Financial          290    16.0%
Goldman, Sachs &       275    10.0%
HSBC Markets           290    16.0%
Hugh Johnson Advi      280    12.0%
IDEAglobal             275    10.0%
IHS Global Insigh      299    19.6%
4/22/2011         New Home New Home
                     Sales    Sales
                    ,000’s     MOM%
Informa Global Ma      285    14.0%
ING Financial Mar      290    16.0%
Insight Economics      300    20.0%
Intesa-SanPaulo        280    12.0%
J.P. Morgan Chase      270     8.0%
Janney Montgomery      275    10.0%
Jefferies & Co.        290    16.0%
Manulife Asset Ma      265     6.0%
MET Capital Advis      247    -1.2%
MF Global              295    18.0%
Moody’s Analytics      290    16.0%
Morgan Keegan & C      259     3.6%
Morgan Stanley &       280    12.0%
Natixis                285    14.0%
Nomura Securities      290    16.0%
OSK Group/DMG          290    16.0%
4/22/2011         New Home New Home
                     Sales    Sales
                    ,000’s     MOM%
Parthenon Group        280    12.0%
Pierpont Securiti      300    20.0%
PineBridge Invest      273     9.0%
PNC Bank               250     0.0%
RBC Capital Marke      290    16.0%
RBS Securities In      300    20.0%
Scotia Capital         275    10.0%
Societe Generale       288    15.2%
State Street Glob      294    17.6%
Stone & McCarthy       290    16.0%
TD Securities          283    13.0%
UBS                    290    16.0%
University of Mar      280    12.0%
Wells Fargo & Co.      287    14.8%
Westpac Banking C      268     7.0%
Wrightson ICAP         280    12.0%
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