Bloomberg News

Sales of New Homes in the U.S. Probably Rose to Nine-Month High

February 24, 2012

Feb. 24 (Bloomberg) -- Purchases of new homes in the U.S. probably rose in January to a nine-month high, more evidence the housing market is improving, economists said before a report today.

Sales, tabulated when contracts are signed, climbed 2.6 percent to a 315,000 annual pace, according to the median estimate in a Bloomberg News survey of 77 economists. Consumer confidence declined in February from a month earlier, separate data may show.

Beazer Homes USA Inc. and D.R. Horton Inc. are among builders benefiting from job gains as well as cheaper properties and lower mortgage rates that have driven affordability to a record high. At the same time, foreclosures that depress prices are a risk, one reason policy makers including Federal Reserve officials are seeking ways to bolster the industry.

“There are signs of greater demand as affordability is very attractive right now,” said Michelle Meyer, a senior economist at Bank of America Corp. in New York. “Parts of the housing market are stabilizing, but it will still take a long time.”

The Commerce Department report is due at 10 a.m. in Washington. Economists’ forecasts ranged from 300,000 to 355,000.

The Thomson Reuters/University of Michigan final index of consumer sentiment fell to 73 in February from 75 a month earlier, according to the Bloomberg survey median. The preliminary reading for this month was 72.5. The report is due at 9:55 a.m.

7 Percent

New-home sales have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing houses are calculated when a deal closes about a month or two later. New properties made up almost 7 percent of the market last year.

Existing-home purchases rose to a 4.57 million annual rate, the National Association of Realtors reported this week. While it was the highest level since May 2010, distressed properties made up the largest portion of all purchases since April. The median price fell 2 percent to $154,700 last month from January 2011.

Demand is getting a boost as more homes become affordable. The Realtors group’s measure of whether households earning the median income can buy a median-priced property at current interest rates reached record levels in the last three months of 2011, recent data showed.

Warmer Weather

The fourth-warmest January on record may have also helped bring out homebuyers. The National Oceanic and Atmospheric Administration reported the average temperature was 36.3 degrees Fahrenheit (2.39 degrees Celsius), 5.5 degrees above the 1901- 2000 long-term average.

Among other signs that housing is improving, builders broke ground on more homes than forecast in January, 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.

D.R. Horton, the largest U.S. homebuilder by volume, reported net home orders rose to 3,794 in the final three months of 2011, from 3,363 a year earlier. Beazer Homes said demand jumped 36 percent in that period, and closings on new houses surged more than 60 percent.

“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 of Atlanta-based Beazer, said on an earnings call on Feb. 2.

Share Prices

Investors also are upbeat about prospects for the industry. The S&P Supercomposite Homebuilding Index has advanced 17 percent this year through yesterday, double the 8.4 percent gain in the broader S&P 500.

Bank of America Corp., JPMorgan Chase & Co. and three other U.S. banks reached a $25 billion settlement with 49 states and the U.S. government to end a probe of abusive foreclosure practices prompted by the collapse of the housing-price bubble.

Fed Chairman Ben S. Bernanke has said the central bank’s efforts to spur growth are being blunted by impediments to mortgage lending and called for more steps to heal housing.

“We need to continue to develop and implement policies that will help the housing sector get back on its feet,” Bernanke told homebuilders on Feb. 10 in Orlando, Florida.

--With assistance from Chris Middleton in Washington. Editors: Vince Golle, Christopher Wellisz

To contact the reporters 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


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus