Home Sales Probably Increased in January: U.S. Economy Preview
Home sales in the U.S. probably climbed in January to the highest level since May 2010, adding to evidence the housing market is regaining its footing, economists said reports this week will show.
Combined purchases of new and existing houses rose to a 4.97 million annual rate from 4.92 million in December, according to the median forecast in a Bloomberg News survey. Claims for jobless benefits held near the lowest level since 2008, bolstering consumer confidence, other reports may show.
A strengthening job market, combined with record affordability driven by the drop in home prices and mortgage rates, will probably keep underpinning demand. Nonetheless, the Federal Reserve and Obama administration are striving to find ways to lend the industry additional assistance amid concern that mounting foreclosures will continue to hinder the recovery.
“Home sales have bottomed, and from here on, we should see a moderate pickup,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York. “Hiring is improving slowly, so that’s helping.” More policy efforts are needed as “we still can’t rely on housing to recover on its own,” she said.
The National Association of Realtors will release data on existing house sales on Feb. 22. Purchases increased 0.9 percent to a 4.65 million annual rate, following a 4.61 million pace in December, according to the Bloomberg survey median.
Sales of new homes climbed to a 315,000 annual rate from 307,000 the prior month, the survey median showed. The report is due from the Commerce Department on Feb. 24. Last year marked a record low for the industry in data going back to 1963, as builders sold 302,000 homes, down 6.2 percent from 2010.
Reports last week indicated housing is on the mend. Builders broke ground on more homes than forecast in January, helped by warmer weather, and construction permits also advanced. The National Association of Home Builders/Wells Fargo index of builder confidence climbed in February to the highest level since May 2007.
Beazer Homes USA Inc. (BZH) reported that orders jumped 36 percent in the final three months of 2011 from a year earlier, and closings on new houses surged more than 60 percent. The Atlanta-based builder said it expects to sell more properties this year than last.
“While our visibility into the economic conditions for the remainder of the year is limited, I believe that we will benefit from a gradually improving housing market,” Allan Merrill, chief executive officer, said on an earnings call on Feb. 2.
Investors also are upbeat about prospects. The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) has advanced 21 percent since the end of last year, outpacing an 8.2 percent gain in the broader S&P 500.
Policy makers are working to help distressed homeowners. The top five mortgage lenders this month reached a $25 billion settlement with 49 states and the U.S. government over the use of faulty paperwork in foreclosures.
Fed Chairman Ben S. Bernanke said the central bank’s efforts to spur growth are being blunted by impediments to mortgage lending, and called for more steps to heal the housing industry.
“The economic recovery has been disappointing in part because U.S. housing markets remain out of balance,” Bernanke told homebuilders on Feb. 10 in Orlando, Florida. “We need to continue to develop and implement policies that will help the housing sector get back on its feet.”
One asset has been the improvement in employment. The jobless rate fell in January to a three-year low of 8.3 percent, and payrolls rose by 243,000 workers.
Firings are also waning, Labor Department figures may show on Feb. 23. Initial jobless claims rose last week to 355,000 after reaching a four-year low the prior week, according to the median forecast in the Bloomberg survey.
Greater affordability is also supporting home demand. The National Association of Realtors’ measure of whether households earning the median income can afford a median-priced house at current interest rates reached a record in the last three months of 2011.
Among other reports this week, the Thomson Reuters/University of Michigan final index of consumer sentiment rose to 72.8 in February from a preliminary reading of 72.5, economists in the Bloomberg survey predicted. The data will be released Feb. 24.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== Exist Homes Mlns 2/22 Jan. 4.61 4.65 Exist Homes MOM% 2/22 Jan. 5.0% 0.9% Initial Claims ,000’s 2/23 18-Feb 348 355 U of Mich Conf. Index 2/24 Feb. F 72.5 72.8 New Home Sales ,000’s 2/24 Jan. 307 315 New Home Sales MOM% 2/24 Jan. -2.2% 2.6% ==============================================================
To contact the reporter on this story: Shobhana Chandra in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Christopher Wellisz in Washington at email@example.com