Bloomberg News

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

August 22, 2012

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

Sales of existing homes probably rebounded in July from an eight-month low, adding to signs U.S. housing may pick up in the second half, economists said before a report today. Photographer: Daniel Acker/Bloomberg

Sales of existing homes probably climbed in July from an eight-month low, adding to signs U.S. housing may pick up in the second half, economists said before a report today.

Purchases rose 3.2 percent to a 4.51 million annual rate, following a decline in the prior month, according to the median forecast of 73 economists surveyed by Bloomberg.

Buoyed by cheaper properties and record-low mortgage costs, demand for real estate is bolstering the industry that helped trigger the recession. Minutes of the Federal Reserve’s latest meeting, also due today, will be a reminder that policy makers are monitoring data such as housing to determine whether the world’s largest economy needs more stimulus.

“The healing in housing continues,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “We’re clearly in an upturn for the sector.”

The National Association of Realtors’ report is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.3 million to 4.8 million, following 4.37 million June.

The Fed will release minutes of its July 31-Aug. 1 meeting at 2 p.m. The central bank has said it will “closely monitor” economic data and financial developments, according to a statement after its gathering, at which policy makers determined they “will provide additional accommodation as needed” to accelerate the expansion.

“Despite some further signs of improvement, the housing sector remains depressed,” the Fed statement also said.

Sales Improved

Existing-home sales, tabulated when a contract closes, have improved 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.

Sales of new homes, counted when contracts are signed, may have rebounded to a 365,000 annual rate in July from 350,000 the prior month, the survey median showed ahead of Commerce Department figures due tomorrow.

Newly constructed houses accounted for 6.7 percent of the residential market in 2011, down from a high of 15 percent during the boom of the past decade. Resales made up the rest.

Construction companies are benefitting from the increase in demand. PulteGroup Inc. (PHM:US), the largest U.S. homebuilder by revenue, posted a better-than-estimated profit and a 32 percent jump in orders in the second quarter. AV Homes Inc. (AVHI:US), which develops properties in Florida and Arizona, said it closed on 41 percent more houses in the second quarter compared to a year earlier, and contracts signed, net of cancellations, more than doubled.

Gaining Strength

“The housing market continues to gain momentum,” Allen Anderson, chief executive officer of AV Homes, said on an Aug. 7 earnings conference call. “We are no longer battling the headwinds of the housing recession.”

Investors also are more upbeat. The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) has advanced 55 percent so far this year, outpacing a 12 percent gain in the broader S&P 500. (SPX)

Reports last week confirmed housing is improving. Building permits, a proxy for future work, jumped to a four-year high in July even as residential starts cooled from the fastest pace in more than three years. The National Association of Home Builders/Wells Fargo index of builder confidence rose in August to the highest level since 2007.

A drop in borrowing costs is making homes are more affordable. The average rate on a 30-year fixed mortgage dropped to 3.49 percent in the week ended July 26, the lowest in records dating to 1971, according to McLean, Virginia-based Freddie Mac.

Foreclosures are abating, though they still pose a threat as borrowers struggle to pay bills. The mortgage delinquency rate, or the share of home loans at least 30 days late, rose in the second quarter from the previous three months, the first gain in a year, according to data from the Mortgage Bankers Association.

                         Bloomberg Survey

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

Date of Release              08/22    08/22
Observation Period            July     July
-------------------------------------------
Median                        4.51     3.2%
Average                       4.52     3.4%
High Forecast                 4.80     9.8%
Low Forecast                  4.30    -1.6%
Number of Participants          73       73
Previous                      4.37    -5.4%
-------------------------------------------
4CAST                         4.59     5.0%
ABN Amro                      4.42     1.0%
Action Economics              4.50     3.0%
Ameriprise Financial          4.50     3.0%
Bantleon Bank AG              4.52     3.4%
Barclays                      4.55     4.1%
BBVA                          4.55     4.1%
BMO Capital Markets           4.32    -1.1%
BNP Paribas                   4.60     5.3%
BofA Merrill Lynch            4.50     3.0%
Briefing.com                  4.30    -1.6%
Capital Economics             4.60     5.3%
CIBC World Markets            4.50     3.0%
Citi                          4.55     4.1%
ClearView Economics           4.45     1.8%
Comerica                      4.30    -1.6%
Commerzbank AG                4.60     5.3%
Credit Agricole CIB           4.55     4.1%
Credit Suisse                 4.65     6.4%
Daiwa Securities America      4.50     3.0%
Danske Bank                   4.59     5.0%
DekaBank                      4.55     4.1%
Desjardins Group              4.50     3.0%
Deutsche Bank Securities      4.50     3.0%
DZ Bank                       4.45     1.8%
Exane                         4.50     3.0%
First Trust Advisors          4.55     4.1%
FTN Financial                 4.55     4.1%
Goldman, Sachs & Co.          4.59     5.0%
Helaba                        4.50     3.0%
High Frequency Economics      4.55     4.1%
Hugh Johnson Advisors         4.67     6.8%
IDEAglobal                    4.50     3.0%
IHS Global Insight            4.45     1.8%
Informa Global Markets        4.42     1.1%
ING Financial Markets         4.51     3.2%
Insight Economics             4.50     3.0%
Intesa Sanpaulo               4.60     5.3%
J.P. Morgan Chase             4.50     3.0%
Janney Montgomery Scott       4.40     0.7%
Jefferies & Co.               4.55     4.1%
John Hancock Financial        4.49     2.7%
Landesbank Berlin             4.80     9.8%
Landesbank BW                 4.55     4.1%
Lloyds Bank                   4.50     3.0%
Maria Fiorini Ramirez         4.60     5.3%
Market Securities             4.59     5.0%
Mizuho Securities             4.48     2.5%
Moody’s Analytics             4.58     4.8%
Morgan Stanley & Co.          4.50     3.0%
National Bank Financial       4.60     5.3%
Natixis                       4.44     1.6%
Nomura Securities             4.45     1.8%
OSK Group/DMG                 4.55     4.1%
Pierpont Securities           4.50     3.0%
PineBridge Investments        4.61     5.5%
PNC Bank                      4.55     4.1%
Raiffeisenbank International  4.60     5.3%
Raymond James                 4.65     6.4%
RBC Capital Markets           4.40     0.7%
RBS Securities                4.40     0.7%
Regions Financial             4.55     4.1%
Scotiabank                    4.40     0.7%
SMBC Nikko Securities         4.50     3.0%
Societe Generale              4.46     2.1%
Standard Chartered            4.55     4.1%
Stone & McCarthy              4.52     3.4%
TD Securities                 4.54     3.9%
UBS                           4.45     1.8%
University of Maryland        4.50     3.0%
Wells Fargo & Co.             4.58     4.8%
Westpac Banking Co.           4.55     4.0%
Wrightson ICAP                4.50     3.0%
============================================

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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Companies Mentioned

  • PHM
    (PulteGroup Inc)
    • $18.82 USD
    • -0.26
    • -1.38%
  • AVHI
    (AV Homes Inc)
    • $15.0 USD
    • -0.49
    • -3.27%
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