Ahead of the Bell: New Home Sales
WASHINGTON (AP) — U.S. sales of new homes likely rose at a steady pace in September after a slight dip the previous month, further evidence that the housing market is steadily improving.
Economists forecast that sales of new homes increased 2.4 percent to a seasonally adjusted annual rate of 382,000 last month, according to a survey by FactSet. The Commerce Department will release the report at 10 a.m. Eastern.
Sales of new homes dipped slightly in August to 373,000, down from a two-year high in July.
Even with the decline, sales were nearly 28 percent higher from a year ago. Home sales are rising from depressed levels and still below the annual pace of 700,000 that economists consider healthy.
Yet the housing recovery appears to be sustainable and is starting to shown signs of accelerating. In September, builders broke ground on single-family homes and apartments at the fastest pace in more than four years. And they requested the most building permits in four years, a sign that many are confident that the gains in home sales will endure.
Builders are more optimistic because they are seeing more prospective buyers visit properties. The National Association of Home Builders/Wells Fargo builder sentiment index rose this month to the highest level in more than six years.
Faster construction could help boost economic growth and hiring. And it could also encourage more people to put their homes on the market.
Sales of previously occupied homes declined in September from a two-year high in August. Still, Sales are up 11 percent from a year earlier.
Home sales have been bolstered by the lowest mortgages rates in decades, more stable price gains and a limited supply of houses for sale. The average rate on the 30-year fixed mortgage has been below 4 percent all year. And the Federal Reserve's aggressive policies could push mortgage rate down even further.
There are still factors dragging on a housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage or can't afford larger down payments.
Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.