Bloomberg News

Sales of Previously Owned U.S. Homes Probably Climbed in June

July 19, 2012

Sales of Previously Owned U.S. Homes Probably Climbed in June

A Realtor places an open house sign outside a five-bedroom row house for sale in the Logan Circle neighborhood of Washington. Photographer: Andrew Harrer/Bloomberg

Sales of previously owned U.S. homes probably rose in June, a report may show today, a sign the recent pickup in demand will be sustained.

Purchases climbed 1.5 percent last month to a 4.62 million annual rate, matching April as the fastest since January, according to the median forecast of 76 economists surveyed by Bloomberg News. Jobless claims increased last week, another report may show.

Mortgage rates at all-time lows and a drop in prices have made properties more affordable for Americans with access to credit. At the same time, the recovery in the housing market will take time as the economy is slow to create jobs and lingering foreclosures put more homes on the market.

“We’re past the bottom and slowly recovering,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We might have one more bout of price weakness ahead when the foreclosure pipeline empties later in the year, but investor demand is strong and we’ll absorb that.”

The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.46 million to 4.75 million.

Federal Reserve Chairman Ben S. Bernanke is among those who say the housing market is improving.

Growth in construction and “historically low mortgage rates” are among “modest signs” of a housing recovery, even as some buyers show concern about personal finances and the broader economy and have difficulty meeting lending standards, Bernanke told the Senate Banking Committee this week.

2010 Low

Existing-home sales, which are tabulated when a contract closes, have climbed since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.

Borrowing costs remain attractive. The average rate on a 30-year, fixed mortgage declined to 3.56 percent last week, the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.

The pickup in residential real estate may reinforce projections the industry will contribute more to economic growth this year. Housing starts climbed to a 760,000 annual rate in June, the fastest since October 2008, Commerce Department figures showed yesterday.

Another report this week showed confidence among homebuilders climbed in July by the most since September 2002. An index of builder sentiment from the National Association of Home Builders/Wells Fargo increased by 6 points in July to 35.

Builder Shares

Signs the housing market is improving have boosted share prices. The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME), which includes D.R. Horton Inc. and PulteGroup Inc., has climbed 50 percent this year, outpacing a 9.2 percent gain in the broader S&P 500 Index.

At the same time, faster progress may prove difficult without an acceleration in job growth. June concluded the worst quarter for corporate hiring since the first three months of 2010, Labor Department figures showed.

Another report today may show jobless claims rebounded last week after falling in the week ended July 7, which reflected the volatility of applications during the annual auto-plant retooling period. The Labor Department will issue the figures at 8:30 a.m. in Washington.

Foreclosures also are hindering the housing rebound. Initial notices, the start of the process, jumped 6 percent in the second quarter from a year earlier, the first annual increase since 2009, according to RealtyTrac Inc., a real estate data provider in Irvine, California.

February Settlement

The rise may reflect February’s $25 billion settlement among 49 state attorneys general and the five major mortgage servicers for improper and fraudulent paperwork related to foreclosures, according to a Bloomberg Government study.

Home prices are stabilizing. The S&P/Case-Shiller index of property values adjusted for seasonal variations rose 0.7 percent in April, the third straight gain.

“This quarter, we continued to see urgency in customers making the buying decision, and rising prices helped create this urgency,” Jonathan Jaffe, chief operating officer of homebuilder Lennar Corp. (LEN:US), said on a June 27 earnings call.

              Bloomberg Survey
===========================================
                           Initial    Exist
                            Claims    Homes
                            ,000’s     Mlns
===========================================
Date of Release              07/19    07/19
Observation Period          14-Jul     June
-------------------------------------------
Median                         365     4.62
Average                        364     4.63
High Forecast                  390     4.75
Low Forecast                   350     4.46
Number of Participants          47       76
Previous                       350     4.55
-------------------------------------------
4CAST                          360     4.60
ABN Amro                       350     4.62
Action Economics               369     4.65
Ameriprise Financial           373     4.62
Analytical Synthesis          ---      4.66
Banca Aletti                   360     4.60
Bantleon Bank AG              ---      4.70
Barclays                       370     4.58
BBVA                           375     4.60
BMO Capital Markets           ---      4.70
BNP Paribas                    365     4.70
BofA Merrill Lynch             360     4.65
Briefing.com                   360     4.65
Capital Economics             ---      4.70
CIBC World Markets            ---      4.68
Citi                           370     4.55
ClearView Economics           ---      4.60
Comerica                      ---      4.60
Commerzbank AG                 360     4.75
Credit Agricole CIB           ---      4.60
Credit Suisse                  360     4.60
Daiwa Securities America      ---      4.63
Danske Bank                   ---      4.58
Desjardins Group               365     4.65
Deutsche Bank Securities       365     4.60
DZ Bank                       ---      4.55
Exane                         ---      4.63
Fact & Opinion Economics       365     4.60
First Trust Advisors           365     4.60
FTN Financial                 ---      4.46
Goldman, Sachs & Co.          ---      4.60
Helaba                         365     4.70
High Frequency Economics       355     4.62
HSBC Markets                  ---      4.62
Hugh Johnson Advisors          360     4.60
IDEAglobal                     355     4.70
IHS Global Insight             390     4.62
Informa Global Markets         365     4.60
ING Financial Markets          374     4.63
Insight Economics              370     4.65
Intesa Sanpaulo               ---      4.70
J.P. Morgan Chase              365     4.65
Janney Montgomery Scott       ---      4.70
Jefferies & Co.                360     4.62
John Hancock Financial         374     4.61
Landesbank Berlin              360     4.60
Landesbank BW                 ---      4.65
Lloyds Bank                    355     4.65
Maria Fiorini Ramirez         ---      4.70
Market Securities             ---      4.58
MET Capital Advisors          ---      4.53
Mizuho Securities              350     4.60
Moody’s Analytics              363     4.59
Morgan Stanley & Co.           360     4.64
National Bank Financial       ---      4.60
Natixis                       ---      4.57
Nomura Securities             ---      4.69
Nord/LB                        360     ---
OSK Group/DMG                 ---      4.65
Pierpont Securities            358     4.70
PNC Bank                      ---      4.65
Raiffeisenbank International  ---      4.65
Raymond James                 ---      4.64
RBC Capital Markets            365     4.60
RBS Securities                 360     4.65
Scotiabank                     355     4.60
SMBC Nikko Securities         ---      4.67
Societe Generale               375     4.62
Southern Polytechnic State     356     ---
Standard Chartered             365     4.62
Stone & McCarthy Research      365     4.62
TD Securities                  375     4.70
UBS                            365     4.60
UniCredit Research            ---      4.75
University of Maryland         370     4.62
Wells Fargo & Co.             ---      4.73
Westpac Banking Co.            360     4.60
Wrightson ICAP                 360     4.65
===========================================

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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Companies Mentioned

  • LEN
    (Lennar Corp)
    • $38.43 USD
    • -0.84
    • -2.19%
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