.S. New-Home Sales Climb 11%, Most in Eight Years (Update1)
Share | Email | Print | A A A
By Courtney Schlisserman
July 27 (Bloomberg) -- Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.
Sales increased to a 384,000 annual pace, higher than any forecast of economists surveyed by Bloomberg News and the most since November, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in more than a decade.
Falling prices and a drop in mortgage rates have started to lure buyers even as the unemployment rate rises. Economists estimate that the worst U.S. recession in five decades is on the verge of ending as downturns in housing and manufacturing ease.
“We are making some progress in absorbing this huge inventory overhang” and that “is a fundamental step we need to take to begin to see home prices improve,” said Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh. At the same time, rising joblessness means “a rebound will be modest at best,” he added.
Builders’ stocks jumped, with the Standard and Poor’s Supercomposite Homebuilding Index gaining 2.3 percent. The broader S&P 500 Stock Index was up 0.1 percent at 980.35 at 10:10 a.m. in New York. Treasuries, which fell earlier in the day, remained lower, with benchmark 10-year note yields rising to 3.75 percent from 3.66 percent at last week’s close.
Economists’ Forecasts
Economists forecast new home sales would rise to a 352,000, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from 335,000 to 377,000. Commerce revised May’s reading up to a 346,000 rate from a previously reported 342,000.
The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month’s value compares with $219,000 in May.
Sales of new homes were down 21 percent from June 2008. They reached a record-low 329,000 in January, down 76 from the July 2005 peak.
The jump in sales in June was led by a 43 percent surge in the Midwest. Purchases increased 29 percent in the Northeast and 23 percent in the West. They dropped 5.3 percent in the South, to the lowest level since January 1991.
Properties for Sale
Builders had 281,000 houses on the market last month, down 4.1 percent from May and the fewest since February 1998. The number of unsold properties fell a record 36 percent from June 2008. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.
Other reports underscore the stabilization in housing. The Wells Fargo/National Association of Homebuilders sentiment index has risen in five of the past six months and existing home sales have increased for three months in a row.
Even so, foreclosure filings reached a record in the first half of the year, providing competition for homebuilders and pushing down the value of all houses. Also, rising unemployment, which economists forecast will top 10 percent by early 2010, threatens to restrain any recovery in housing.
Standard Pacific Corp., the U.S. homebuilder that gets most of its revenue from California, is among companies seeing a stabilization. It’s net loss, the 11th consecutive drop, narrowed to $23.1 million in the second quarter from $249 million a year earlier, the Irvine, California-based company said last week. Revenue fell 29 percent.
‘A Lot Closer’
“While we still obviously have not achieved the level of profitability that we ultimately need, we are a lot closer than we were a couple of quarters ago and believe that we are in pretty good shape in the short run,” Chief Executive Officer Ken Campbell said in a July 22 statement.
Federal Reserve policy makers have committed to a $1.25 trillion program to purchase securities backed by home loans in an effort to put a floor under the housing market and lower borrowing costs. Those purchases, as well as direct government purchases of Treasuries, drove the rate on 30-year mortgages to a record-low 4.78 percent in April, according to figures from Freddie Mac. Rates have since hovered around 5 percent.
Fed Chairman Bernanke said July 21 that the economy is showing “tentative signs of stabilization” and the “decline in housing activity appears to have moderated.”
Another incentive is the $8,000 tax credit for first-time buyers that is part of the Obama administration’s economic stimulus plan. Purchases have to be completed before Dec. 1.
NVR Inc., the fourth-largest U.S. homebuilder, said last week that new orders increased 2 percent in the second quarter compared with a year earlier. The rate of cancellations fell to 14 percent from 19 percent in the second quarter of 2008 and 15 percent in the first three months of this year.
To contact the reporter on this story: Courtney Schlisserman in Washington
cschlisserma@bloomberg.net
Last Updated: July 27, 2009 10:16 EDT
Cumps.
Enviado: 29/7/2009 11:55
