Sales of Existing U.S. Homes Probably Fell After February Surge
Home resales in the U.S. probably slipped in March after jumping a month earlier by the most in more than five years, indicating the market will not rebound quickly, economists said before a report today.
Purchases of existing homes fell 1.5 percent to a 4.65 million annual pace from 4.72 million a month earlier, according to median forecast in a Bloomberg News survey. The 5.1 percent jump in February sales was the biggest gain since July 2003.
Record-low mortgage rates and a foreclosure-driven plunge in prices are making houses more affordable, raising speculation the market may be stabilizing following the biggest slump since the Great Depression. Even so, mounting job losses dim prospects for an immediate recovery.
“We’re still bumping along at the bottom,” said Kurt Karl, chief U.S. economist at Swiss Reinsurance Co. in New York. “We’re going to have this slow grinding improvement through the next three to six months in the general economy and also in housing.”
The report from the National Association of Realtors is due at 10 a.m. in Washington. The median forecast was based on 69 estimates that ranged from a low 4.37 million rate to 4.9 million.
A report from the Labor Department at 8:30 a.m. will probably show jobless claims last week increased after dropping to the lowest level in three months the previous week, the survey showed.
Jobs, Foreclosures
A weak job market is one reason economists project foreclosures will keep rising as unemployed owners fall behind on mortgage payments. 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, said RealtyTrac Inc., an Irvine, California-based seller of mortgage data instant payday loan.
The surge in foreclosures is causing prices to drop, making homes more affordable, particularly for first-time buyers, the real-estate agents’ group said last month. Distressed properties accounted for about 45 percent of all home resales in February, the group said.
Additionally, 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. It reached a record-low 4.78 percent in the week ended April 2.
The NAR’s affordability index, which tracks mortgage rates, home prices and incomes, surged in February to the highest level in 20 years of data.
‘Tentative Signs’
Federal Reserve Chairman Ben S. Bernanke said last week that “we have seen tentative signs that the sharp decline in economic activity may be slowing,” citing housing and retail sales. “A leveling out of economic activity is the first step toward recovery.” Central bankers are due to meet again next week.
While demand for foreclosed homes has boosted resales, it may be depressing purchases of new homes, which plunged to a record low in January.
“The housing market continued its downward trend throughout our first quarter,” Lennar Corp. Chief Executive Officer Stuart Miller said in a statement on March 31. “Increased unemployment and growing foreclosure rates negatively impacted new-home sales in most of our markets.”
Filed under: economics by Finance Boss