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

March 23, 2012

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.

March 22 (Bloomberg) — Steve Berkowitz, chief executive officer of Move Inc., talks about the outlook for the U.S. housing market. Home prices fell 0.8 percent in January from a year earlier, the smallest decline in more than two years, as the property market begins to stabilize. Berkowitz speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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%                   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%

To contact the reporter on this story: Timothy R. Homan in Washington at

To contact the editor responsible for this story: Christopher Wellisz at




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