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Sales of U.S. Existing Homes Probably Rose to Three-Year High

Sales of existing homes probably climbed in April to the highest level in more than three years, giving a lift to the U.S. expansion, economists said before a report today.

Purchases of previously owned residences rose to a 4.99 million annualized rate last month, the highest since November 2009, from 4.92 million in March, according to the median forecast of 78 economists surveyed by Bloomberg.

Housing has gained strength as borrowing costs near record lows and job gains rebuild confidence, spur demand and stabilize prices. The effects are rippling through the world’s largest economy, affecting builders including Ryland Group Inc., retailers such as Home Depot Inc., and mortgage lenders.

“The market is definitely a lot healthier than it has been for some time,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama. “Other parts of the economy aren’t holding up their part of the bargain, but housing is holding up its end.”

Federal Reserve Chairman Ben S. Bernanke, who is to testify before Congress today on the economic outlook, will be able to point to the real estate rebound as a policy success even as manufacturing and other sectors cool. The central bank is boosting home sales and holding down interest rates with $40 billion a month in mortgage bond purchases.

In testimony to the Joint Economic Committee, Bernanke may offer clues as to whether the labor market is strong enough to warrant reducing stimulus. Later today, the Fed will release minutes of its most recent meeting, at which policy makers said they were prepared to adjust their bond purchases depending on the state of the economy.

Survey Results

The National Association of Realtors’ home-sales report is due at 10 a.m. Washington time. Economists’ projections in the Bloomberg survey ranged from 4.85 million to 5.1 million.

The projected pace of April sales would be the fastest since a homebuyer tax credit was first due to expire in November 2009. It would be the third-highest since July 2007.

Atlanta-based Home Depot, the largest home-improvement retailer in the U.S., yesterday posted first-quarter profit that topped analyst estimates as the housing rebound lifted renovation spending. The retailer had about 337.1 million transactions in the quarter, up 2.5 percent from a year earlier.

Builders, too, are benefitting from higher demand, which has led to a shortage of houses for sale. At West Lake Village, California-based Ryland, sales are up in all markets and the company reported a first-quarter profit for the first time in six years, President and Chief Executive Officer Larry Nicholson said.

Everything ‘Positive’

“It’s tough to find any negatives really,” Nicholson said at a conference yesterday. “The industry is obviously in recovery mode. Everything is moving in a positive direction.”

Sales of newly built houses picked up to a 425,000 annualized rate, a three-month high, according to the median forecast in a Bloomberg survey of economists ahead of a Commerce Department report tomorrow.

Building permits increased 14.3 percent to a 1.02 million annualized rate in April, the highest level since June 2008, the Commerce Department reported last week, as construction companies looked to boost the inventory of homes on the market.

The growth has increased demand for lumber and other supplies, leading to shortages in some areas, according to a survey from the National Association of Homebuilders last week.

                  Bloomberg Survey
                             Exist    Exist
                             Homes    Homes
                              Mlns     MOM%
Date of Release              05/22    05/22
Observation Period           April    April
Median                        4.99     1.4%
Average                       4.98     1.3%
High Forecast                 5.10     3.7%
Low Forecast                  4.85    -1.4%
Number of Participants          78       78
Previous                      4.92    -0.6%
4CAST Ltd.                    5.01     1.8%
ABN Amro Inc.                 5.00     1.5%
Action Economics              5.00     1.6%
Ameriprise Financial Inc      4.99     1.4%
Banca Aletti & C spa          5.02     2.0%
Bank of the West              4.96     0.8%
Bank of Tokyo- Mitsubishi     5.00     1.6%
Barclays                      4.94     0.4%
BBVA                          4.98     1.2%
BMO Capital Markets           5.00     1.6%
BNP Paribas                   5.00     1.6%
BofA Merrill Lynch Resear     4.99     1.4%                  5.05     2.6%
Capital Economics             4.97     1.0%
CIBC World Markets            5.05     2.6%
Citi                          4.98     1.2%
ClearView Economics           5.05     2.6%
Commerzbank AG                4.98     1.2%
Credit Agricole CIB           4.93     0.2%
Credit Suisse                 5.10     3.7%
Daiwa Securities America      5.00     1.6%
Danske Bank A/S               5.00     1.6%
DekaBank                      5.00     1.6%
Desjardins Group              5.00     1.6%
Deutsche Bank Securities      4.95     0.6%
DZ Bank                       4.95     0.6%
First Trust Advisors          4.97     1.0%
FTN Financial                 4.98     1.2%
Goldman, Sachs & Co.          4.92     0.0%
Hammer Partners SA            4.98     1.2%
Helaba                        5.00     1.6%
High Frequency Economics      5.02     2.0%
HSBC Markets                  5.05     2.6%
Hugh Johnson Advisors         4.90    -0.4%
IDEAglobal                    5.00     1.6%
IHS Global Insight            4.99     1.4%
Informa Global Markets        4.87    -1.0%
ING Financial Markets         4.97     1.0%
Intesa Sanpaolo               4.97     1.0%
J.P. Morgan Chase             5.00     1.6%
Janney Montgomery Scott L     4.92     0.0%
Jefferies LLC                 4.95     0.6%
John Hancock Financial        5.01     1.7%
Landesbank Berlin             4.98     1.2%
Landesbank BW                 4.95     0.6%
Lloyds Tsb Bank Plc           4.99     1.4%
Market Securities             4.96     0.8%
MET Capital Advisors          5.02     2.0%
Mizuho Securities             4.95     0.5%
Moody’s Analytics             5.01     1.8%
Morgan Stanley                4.99     1.4%
National Bank Financial       4.95     0.6%
Natixis                       4.96     0.8%
Nomura Securities Intl.       5.00     1.6%
OSK Group/DMG                 4.97     1.0%
Oxford Economics Ltd          4.85    -1.4%
Pantheon Macroeconomic        5.10     3.7%
Pierpont Securities LLC       4.97     1.0%
PNC Bank                      4.98     1.2%
Prestige Economics            5.02     2.0%
Raiffeisenbank Internatio     4.97     1.0%
Raymond James                 4.96     0.8%
RBC Capital Markets           5.10     3.7%
RBS Securities Inc.           4.98     1.2%
Regions Financial Corp        5.02     2.0%
Santander Asset Mgmt          4.99     1.4%
Scotiabank                    4.90    -0.4%
SMBC Nikko Securities         5.00     1.6%
Societe Generale              4.97     1.0%
Standard Chartered Bank       4.98     1.2%
Stone & McCarthy Research     4.99     1.4%
TD Securities                 4.91    -0.2%
UBS                           5.00     1.6%
UniCredit Research            5.00     1.6%
University of Maryland        4.99     1.5%
Wells Fargo & Co.             5.00     1.6%
Westpac Banking Co.           4.97     1.0%
Wrightson ICAP                4.97     1.0%

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