Previously Owned U.S. Home Sales Probably Climbed in January
February 23, 2012, 12:58 AM ESTBy Shobhana Chandra
Feb. 22 (Bloomberg) -- Sales of previously owned U.S. houses probably rose in January to the highest level since May 2010, adding to signs the housing market is regaining its footing, economists said before a report today.
Purchases climbed 1.1 percent, a fourth straight monthly increase, to a 4.66 million annual rate from a 4.61 million pace in December, according to the median forecast of 74 economists surveyed by Bloomberg News.
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.
“Things are beginning to pick up here,” said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut. “We will see better home sales data in coming months. With healthier gains in payrolls, incomes should be picking up as well. That’s going to spill over.”
The National Association of Realtors’ data are due at 10 a.m. in Washington. Economists’ estimates ranged from 4.4 million to 4.91 million.
Existing-home sales, tabulated when a contract closes, climbed to 4.26 million last year, from 4.19 million in 2010. Demand peaked at 7.1 million in 2005 during the housing boom. In 2008, sales totaled 4.1 million, the least since 1995.
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. Employment growth has accelerated in each of the past three months.
Housing Affordability
Greater affordability is also supporting home demand. The Realtors group’s measure of whether households earning the median income can afford a median-priced house at current interest rates reached record levels in the last three months of 2011.
Reports last week indicated housing is on the mend. Builders broke ground on more homes than forecast in January, helped by warmer weather, and 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. 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.
Warmer Weather
The fourth-warmest January on record may have boosted homebuyer traffic. The National Oceanic and Atmospheric Administration reported the average temperature was 36.3 degrees Fahrenheit (2.39 Celsius), 5.5 degrees above the 1901-2000 long- term average.
The favorable conditions helped spark Home Depot Inc.’s biggest sales gain since the first quarter of 2004. The world’s largest home-improvement retailer said yesterday that receipts at stores open at least a year climbed 5.7 percent in the three months ended Jan. 29. Net income increased 32 percent to 50 cents a share from 36 cents a year earlier, the Atlanta-based company said.
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’s Bernanke
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.”
The foreclosure crisis is unlikely to subside any time soon. Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine, California.
--With assistance from Chris Middleton in Washington. Editors: Vince Golle, James Tyson
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
