U.S. Sales of New Homes Probably Climbed to One-Year High

By Timothy R. Homan - Mar 23, 2012 12:01 PM GMT+0800


Purchases of new homes in the U.S. probably rose in February to the highest level in more than a year, economists said before a report today.

Sales, tabulated when contracts are signed, climbed 1.3 percent to a 325,000 annual pace, the fastest since December 2010, according to the median estimate in a Bloomberg News survey of 78 economists. That would mark the fifth gain in six months.
Enlarge image Sales of New Houses in U.S. Probably Climbed

Affordability is increasing as hiring picks up, incomes grow, home prices steady and mortgage rates hold near record lows. At the same time, builders face increasing competition from foreclosures, which are hurting all property values.

“We’re in the early stages of a recovery in sales,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “We’ve seen builders saying things are improving, and the weather’s been pretty good.”

The Commerce Department report is due at 10 a.m. in Washington. Economists’ forecasts ranged from 310,000 to 350,000.

New-home sales have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing homes are calculated when a deal closes about a month or two later. New properties made up almost 7 percent of the market last year, down from a high of 15 percent during the last decade’s housing boom.

Existing-home purchases eased to a 4.59 million annual rate last month from a 4.63 million pace in January, the National Association of Realtors reported this week. Even with the decline, January and February sales marked the strongest start to a year since 2007.

Warmer Weather

Warmer weather may have may have encouraged more Americans to shop for new properties last month. The average temperature was 38.2 degrees Fahrenheit (3.4 Celsius), 3.6 degrees warmer than the 20th century average and the 17th warmest February in 118 years, according to the National Oceanic and Atmospheric Administration.

Among other signs that housing is improving, builders this year have broken ground on homes at the fastest pace since October-November 2008, according to Commerce Department figures released this week. Permits for construction climbed to the highest level since 2008, the same report showed.

The National Association of Home Builders/Wells Fargo sentiment index held in March at the highest level since June 2007. Sales expectations climbed for a sixth month, according to the March 19 report.

Investors also are upbeat about prospects for the industry. The S&P Supercomposite Homebuilding Index has advanced 25 percent this year through yesterday, compared with the 11 percent gain in the broader S&P 500.

Positive Outlook

Ryland Group Inc. (RYL), which builds homes with an average price of $255,000 in 13 states, said it has a positive outlook for 2012.

“We finished the year on a strong note, entered the year optimistic and still feel fairly optimistic today,” Larry Nicholson, president and chief executive officer at the Westlake Village, California-based company, said March 6 at an investor conference. “The good thing about the traffic we are seeing is it’s new traffic. We feel a lot better than we did a year ago.”

Nonetheless, foreclosures remain a concern. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said last week.

“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in the statement. “That should result in more states posting annual increases in the coming months.”

To hold down borrowing costs like mortgage rates, Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist.

Bloomberg Survey
============================================
New Home New Home
Sales Sales
,000’s MOM%
============================================
Date of Release 03/23 03/23
Observation Period Feb. Feb.
-------------------------------------------
Median 325 1.3%
Average 326 1.5%
High Forecast 350 9.0%
Low Forecast 310 -3.4%
Number of Participants 78 78
Previous 321 -0.9%
-------------------------------------------
4CAST 320 -0.3%
ABN Amro 324 1.0%
Action Economics 328 2.2%
Aletti Gestielle 325 1.3%
Ameriprise Financial 325 1.3%
Analytical Synthesis 326 1.6%
Banca Aletti 325 1.3%
Banesto 326 1.6%
Barclays Capital 321 0.0%
BBVA 318 -0.9%
BMO Capital Markets 325 1.3%
BNP Paribas 330 2.8%
BofA Merrill Lynch 310 -3.4%
Briefing.com 320 -0.3%
Capital Economics 325 1.3%
CIBC World Markets 325 1.3%
Citi 320 -0.3%
Comerica 320 -0.3%
Commerzbank AG 325 1.3%
Credit Agricole CIB 324 0.9%
Credit Suisse 330 2.8%
Daiwa Securities America 338 5.3%
Danske Bank 322 0.3%
DekaBank 330 2.8%
Desjardins Group 330 2.8%
Deutsche Bank Securities 325 1.3%
DZ Bank 318 -0.9%
Exane 330 2.8%
Fact & Opinion Economics 327 1.9%
First Trust Advisors 325 1.3%
FTN Financial 325 1.3%
Goldman, Sachs & Co. 328 2.0%
Helaba 330 2.8%
High Frequency Economics 350 9.0%
HSBC Markets 321 0.0%
Hugh Johnson Advisors 325 1.3%
IDEAglobal 330 2.8%
IHS Global Insight 327 1.9%
Informa Global Markets 323 0.6%
ING Financial Markets 330 2.8%
Insight Economics 325 1.3%
Intesa Sanpaulo 330 2.8%
J.P. Morgan Chase 320 -0.3%
Janney Montgomery Scott 321 0.0%
Jefferies & Co. 325 1.3%
Landesbank Berlin 320 -0.3%
Landesbank BW 325 1.3%
Market Securities 316 -1.6%
MET Capital Advisors 315 -1.9%
Mizuho Securities 328 2.0%
Moody’s Analytics 332 3.4%
Morgan Keegan & Co. 326 1.6%
Morgan Stanley & Co. 335 4.4%
National Bank Financial 330 2.8%
Natixis 325 1.3%
Nomura Securities 322 0.3%
OSK Group/DMG 314 -2.2%
O’Sullivan 330 2.8%
Parthenon Group 320 -0.3%
Pierpont Securities 335 4.4%
PineBridge Investments 337 5.0%
PNC Bank 345 7.5%
Raymond James 330 2.8%
RBC Capital Markets 310 -3.4%
RBS Securities 315 -1.9%
Scotia Capital 330 2.8%
SMBC Nikko Securities 325 1.3%
Societe Generale 335 4.4%
Standard & Poor’s 328 2.2%
Standard Chartered 330 2.8%
Stone & McCarthy Research 325 1.3%
TD Securities 335 4.4%
UBS 330 2.8%
University of Maryland 329 2.5%
Wells Fargo & Co. 320 -0.3%
WestLB AG 325 1.3%
Westpac Banking Co. 328 2.0%
Wrightson ICAP 330 2.8%
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