Bloomberg News

Sales of U.S. Homes Probably Climbed in April

May 22, 2012

A pre-owned single family home for sale in Fort Collins, Colorado. Photographer: Matthew Staver/Bloomberg

A pre-owned single family home for sale in Fort Collins, Colorado. Photographer: Matthew Staver/Bloomberg

Sales of existing U.S. homes probably rose in April for the first time in three months, indicating the industry is stabilizing, economists said before a report today.

Purchases climbed 2.9 percent to a 4.61 million annual rate last month, according to the median forecast of 73 economists surveyed by Bloomberg News. The pace would be just shy of the 4.63 million reached in January that was the strongest in more than a year.

Gains in employment, depressed prices and record-low mortgage rates may bring more properties within reach of buyers, eliminating a source of weakness for the world’s largest economy just as risks from Europe’s debt crisis climb. At the same time, efforts to reduce foreclosures and free up financing are just beginning to take root, signaling a sustained housing recovery will take time to develop.

“The housing market continues to show signs of healing, albeit gradually,” said Michelle Meyer, a senior economist at Bank of America Corp. in New York. “Progress is being made on easing the foreclosure burden, but it is slow.”

The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.47 million to 4.8 million, following 4.48 million in March.

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 4.11 million, the least since 1995.

Record Affordability

A real estate agents group’s affordability index, which is based on a combination of resale prices, household income and mortgage rates, reached a record high in the first quarter, a report this month showed.

Borrowing costs remain attractive. The average rate on a 30-year fixed mortgage fell to an all-time low of 3.79 percent in the week ended May 17, according to data from Freddie Mac going back to 1971. The average 15-year rate dropped to 3.04 percent, also a record low, the McLean, Virginia-based mortgage- finance company said.

Rising employment and incomes may provide more support for housing. The unemployment rate fell in April to a three-year low of 8.1 percent as employers added 115,000 jobs, according to Labor Department figures.

The Commerce Department may report tomorrow that new-home sales, tabulated when contracts are signed, rose in April to a 337,000 pace, according to the Bloomberg survey median.

Underpin Growth

The steadying outlook for residential real estate may reinforce projections the industry that helped trigger the recession will contribute to economic growth this year. Housing starts climbed to a 717,000 annual rate in April, more than anticipated. The National Association of Home Builders/Wells Fargo confidence index jumped in May to a five-year high.

The Standard & Poor’s Supercomposite Homebuilding (S15HOME) Index has advanced 30 percent so far this year, outpacing a 4.6 percent gain in the broader S&P 500.

PulteGroup Inc. (PHM:US), the largest U.S. homebuilder by revenue, said orders rose 15 percent to 4,991 homes in its first quarter, and backlogs increased 12 percent to 5,798 homes.

“It was the first quarter in several years that fundamental demand came in stronger than expected,” Richard Dugas, chief executive officer of the Bloomfield Hills, Michigan-based company, said during an April 26 conference call with analysts. “We are pleased with how the year has started off, including a continuation of better sales activity thus far in April.”

Five-Year Low

Foreclosure filings fell to a five-year low in April as lenders sought to avoid seizing property. The number of default, auction and seizure notices sent to homeowners totaled 188,780 last month, down 14 percent from a year earlier and 5 percent from March, according to RealtyTrac Inc.

There are signs property values may also stabilize. Home prices rose 0.6 percent in March from the previous month, the first sequential advance since July and the third straight month-over-month gain excluding short sales and foreclosure sales, mortgage data company CoreLogic Inc. reported. Prices fell 0.6 percent from a year earlier, it said.

                         Bloomberg Survey

================================================================
                             Exist    Exist
                             Homes    Homes
                              Mlns     MOM%
================================================================

Date of Release              05/22    05/22
Observation Period           April    April
----------------------------------------------------------------
Median                        4.61     2.9%
Average                       4.63     3.3%
High Forecast                 4.80     7.1%
Low Forecast                  4.47    -0.2%
Number of Participants          73       73
Previous                      4.48    -2.6%
----------------------------------------------------------------
4CAST Ltd.                    4.68     4.5%
ABN Amro Inc.                 4.62     3.0%
Action Economics              4.60     2.7%
Ameriprise Financial Inc      4.62     3.1%
Analytical Synthesis          4.59     2.5%
Banca Aletti & C spa          4.73     5.6%
Bantleon Bank AG              4.70     4.9%
Barclays                      4.61     2.9%
BBVA                          4.55     1.6%
BMO Capital Markets           4.70     4.9%
BNP Paribas                   4.70     4.9%
BofA Merrill Lynch Resear     4.59     2.5%
Briefing.com                  4.80     7.1%
Capital Economics             4.65     3.8%
CIBC World Markets            4.65     3.8%
Citi                          4.60     2.7%
ClearView Economics           4.55     1.6%
Comerica Inc                  4.58     2.2%
Commerzbank AG                4.60     2.7%
Credit Agricole CIB           4.60     2.7%
Credit Suisse                 4.70     4.9%
Daiwa Securities America      4.55     1.6%
DekaBank                      4.65     3.8%
Desjardins Group              4.65     3.8%
Deutsche Bank Securities      4.60     2.7%
Exane                         4.65     3.8%
Fact & Opinion Economics      4.78     6.7%
First Trust Advisors          4.67     4.2%
FTN Financial                 4.47    -0.2%
Goldman, Sachs & Co.          4.66     4.0%
High Frequency Economics      4.75     6.0%
HSBC Markets                  4.55     1.6%
Hugh Johnson Advisors         4.55     1.6%
IDEAglobal                    4.60     2.7%
IHS Global Insight            4.60     2.7%
Informa Global Markets        4.55     1.6%
ING Financial Markets         4.70     4.9%
Insight Economics             4.60     2.7%
Intesa Sanpaulo               4.60     2.7%
J.P. Morgan Chase             4.55     1.6%
Janney Montgomery Scott L     4.73     5.6%
Jefferies & Co.               4.60     2.7%
Landesbank Berlin             4.80     7.1%
Landesbank BW                 4.70     4.9%
Market Securities             4.55     1.6%
MET Capital Advisors          4.57     2.0%
Mizuho Securities             4.57     2.0%
Moody’s Analytics             4.54     1.3%
Morgan Stanley & Co.          4.55     1.6%
National Bank Financial       4.55     1.6%
Natixis                       4.61     2.9%
Nomura Securities Intl.       4.63     3.4%
OSK Group/DMG                 4.65     3.8%
O’Sullivan                    4.55     1.5%
Parthenon Group               4.71     5.1%
Pierpont Securities LLC       4.75     6.0%
PNC Bank                      4.60     2.7%
Raiffeisenbank Internatio     4.75     6.0%
Raymond James                 4.60     2.7%
RBC Capital Markets           4.70     4.9%
RBS Securities Inc.           4.58     2.2%
Scotiabank                    4.60     2.7%
SMBC Nikko Securities         4.70     4.9%
Societe Generale              4.50     0.5%
Standard Chartered            4.65     3.8%
Stone & McCarthy Research     4.60     2.7%
TD Securities                 4.62     3.1%
UBS                           4.66     4.0%
University of Maryland        4.64     3.6%
Wells Fargo & Co.             4.71     5.1%
WestLB AG                     4.58     2.2%
Westpac Banking Co.           4.71     5.0%
Wrightson ICAP                4.60     2.7%
================================================================

To contact the report 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


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  • PHM
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