Sales of previously owned U.S. homes probably eased in January, reflecting a pause in momentum for the industry coming off its best year since 2007, economists said before a report today.
Purchases fell 0.8 percent to a 4.9 million annualized rate last month from December’s 4.94 million, according to the median forecast of 79 economists surveyed by Bloomberg. Other data may show consumer prices were contained in January and a measure of the economic outlook for the next three to six months climbed.
A sustained pickup in housing will depend on faster progress in the labor market, fewer foreclosures and easier access to credit. Near record-low mortgage costs and the prospect of firming prices may induce buyers to return to the market at a time the available supply of homes is shrinking, posing a potential restraint on sales.
“Housing is still very much in recovery,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “It could be a lot faster. We do need to see job gains continuing. Banks are a little more willing to lend, but it’s still a very gradual process.”
The Realtors’ report is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.7 million to 5.1 million.
At 8:30 a.m., Labor Department figures may show the consumer-price gauge advanced 0.1 percent in January, the first increase in three months, according to the Bloomberg survey median. The core index, which excludes volatile food and energy expenses, may have climbed 0.2 percent after a 0.1 percent gain. Compared with January 2012, the core rose 1.8 percent, the smallest year-over-year increase since July 2011, the survey median showed.
Applications for jobless benefits may have climbed for the first time in three weeks, economists forecast before another 8:30 a.m. report from the Labor Department. The median estimate of 355,000 claims for last week compares with 367,000 at the end of last year and shows some progress in the job market.
In a sign manufacturing is stabilizing, the Federal Reserve Bank of Philadelphia’s general economic index may have rebounded to 1.1 in February from minus 5.8 last month, the Bloomberg survey median showed. The report is due at 10 a.m.
At the same time, figures from the Conference Board may show its gauge of U.S. leading indicators climbed 0.2 percent in January, according to economists surveyed by Bloomberg. The gain, following a 0.5 percent increase in December, signals the world’s largest economy will keep expanding this year.
Existing-home sales, tabulated when a contract closes, have recovered since reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005. A total of 4.65 million previously owned houses were sold last year, the most since 2007 and up 9.2 percent from 2011. Resales accounted for about 93 percent of the residential market in 2012.
Company results indicate the improvement in residential real estate will continue. PulteGroup (PHM:US), Lennar Corp. (LEN:US) and D.R. Horton Inc. (DHI:US), the top three U.S. homebuilders by market value, said orders rose in the most recently reported quarter.
A report yesterday from the Commerce Department showed single-family home starts increased in January to the highest level since July 2008. Total housing starts dropped to an 890,000 pace, restrained by a drop in construction of multifamily dwellings.
This year may show “at least 950,000 housing starts, probably closer to 1 million, based upon what we have seen so far in terms of order rates as well as permitting activity,” Gregory Hayes, chief financial officer at United Technologies Corp. (UTX:US), said at a Feb. 7 conference. The Hartford, Connecticut- based company’s businesses include Carrier air conditioners and Otis elevators.
“If housing starts really do pick up as we expect and the economy picks up as we expect, I think what you’ll see is pretty good growth in the residential business” that includes Carrier air conditioners, Hayes said.
The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) has surged 61 percent in the 12 months to Feb. 20, outpacing an 11 percent gain in the broader S&P 500. (SPX)
Buying a property is more affordable for those who can get credit. The average fixed rate on a 30-year loan held at 3.53 percent in the week ended Feb. 14, down from 3.87 percent a year ago, according to McLean, Virginia-based Freddie Mac.
Delinquencies, while still a hurdle to the industry’s rebound, continue to wane. Foreclosure filings fell 28 percent in January from a year earlier to the lowest level since April 2007, as a new California law slowed first-time defaults in the most-populous state, according to RealtyTrac, an Irvine, California-based data provider.
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