Sales of new homes in U.S. likely to climb from record low

April 26, 2011 - 0:0

Purchases of new houses in the U.S. probably rose in March from a record low, a report on Monday showed.

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. (SPX)
------------Orders slump KB Home (KBH), 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.”
(Source: Bloomberg)