Pending U.S. Home Resales Probably Steadied as Market Settled
The number of Americans who signed contracts to buy previously owned homes was probably unchanged in March as lower prices attracted buyers, economists said before a report today.
The result, the median of 25 estimates in a Bloomberg News survey, would come after a 2.1 percent gain in February.
Foreclosure-driven declines in values and lower mortgage rates are putting homes within reach for more Americans, potentially charting a path out of the housing recession that’s now in its fourth year. Still, mounting job losses are tempering the benefits of tax breaks for first-time buyers and efforts to thaw credit, slowing an economic recovery.
“The housing market is healing,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “Homebuyers are snapping up foreclosed properties that are, in many cases, almost 50 percent below market prices of just a few years ago. Housing is truly affordable today.”
The National Association of Realtors is due to release its report at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from a 2 percent drop to a 3.5 percent gain.
At the same time, the Commerce Department is scheduled to report construction spending for March. Economists surveyed by Bloomberg forecast a 1.7 percent drop after a decline of 0.9 percent in February.
Homebuilders have cut back construction for much of the past two years to adjust to slower demand. Inventories of new homes fell to a seven-year low in March, the Commerce Department reported on April 24.
Some Stabilization
Other reports point to some stabilization in the housing market. The decline in home prices in 20 major U.S. cities slowed during February for the first time since 2007, the S&P/Case-Shiller index showed on April 28. Also, sales of previously-owned homes in March held above a decade-low reached two months earlier, NAR, the realtors group, said April 23.
Pending resales are considered a leading indicator because they track contract signings online cash advances. NAR’s existing-home sales report tallies closings, which typically occur a month or two later. The group, whose pending data goes back to January 2001, started publishing the index in March 2005.
Government efforts to lower borrowing costs and unclog lending may be starting to pay off. The average rate on a 30- year fixed mortgage fell below 5 percent for the second time on record in the week ended March 19 and has held below that since, according to Freddie Mac. The rate reached a record low of 4.78 percent in the week ended April 2.
NAR’s affordability index, which tracks mortgage rates, home prices and incomes, surged in February to the highest level in 20 years of data.
Contraction Slowing
The Federal Reserve last week refrained from increasing purchases of Treasuries and mortgage securities, indicating policy makers believe the worst of the recession has passed, while keeping the benchmark interest rate between zero and 0.25 percent. The Fed said the pace of economic contraction “appears to be somewhat slower.”
Even so, a weak job market is one reason economists say the housing market will be slow to rebound and foreclosures may keep rising. A total of 803,489 properties received a default or auction notice or were seized in the first quarter, the highest since records began four years ago, according to RealtyTrac Inc., an Irvine, California-based seller of mortgage data.
Distressed properties accounted for about 50 percent of all home resales in March, according to NAR, up from about 45 percent in previous months. First-time buyers accounted for about 51 percent of sales.
Builders are struggling as buyers flock to foreclosed properties at bargain prices.
Filed under: finance by Finance Boss