Pending Sales of Existing U.S. Homes Probably Climbed in January
The number of contracts to buy previously owned U.S. homes probably rose 1 percent in January for a second month, showing the extension of a tax credit is sparking limited interest, economists said before a private report today.
The projected gain in the index of purchase agreements, or pending home sales, is based on the median forecast of 40 economists surveyed by Bloomberg News and follows a record 16 percent drop in November. Other reports may show factory orders climbed and jobless claims fell.
The renewal of a government incentive to first-time buyers, originally due to expire at the end of November, and its expansion to include current owners has yet to lure buyers back into the market after helping boost sales in 2009. A lack of jobs and mounting foreclosures have depressed confidence, indicating housing will take time to rebound.
“The earlier surge in sales last year spurred hope of a quick housing recovery, but it now appears the recovery will be more slowly paced,” said Aaron Smith, an economist at Moody’s Economy.com in West Chester, Pennsylvania.
The National Association of Realtors is scheduled to release the report at 10 a.m. in Washington. Survey estimates ranged from a drop of 4.2 percent to an increase of 4 percent.
A 10 a.m. report from the Commerce Department may show a surge in demand for commercial aircraft fueled a 1.8 percent increase in factory orders in January, the biggest gain in four months. A report on bookings for durable goods last week showed orders for capital equipment may have dropped, signaling business investment paused to start the year.
Fewer Claims
First-time filings for jobless benefits dropped by 26,000 to 470,000 last week, according to the survey median before a Labor Department report due at 8:30 a.m. Claims jumped the prior week partly because government offices processed a backlog of applications in mid-Atlantic states and New England, where snowstorms hit earlier in February, a spokesman said.
Other figures from the Labor Department may show productivity increased at a revised 6 free credit score.3 percent annual pace in the fourth quarter
Improvement in the labor market is needed to propel the economic recovery and stem the surge in home foreclosures that is holding down prices. Foreclosure filings rose 15 percent in January compared with a year earlier and exceeded 300,000 for the 11th straight month, RealtyTrac Inc. said Feb. 11.
Sales Slump
Reports last week showed the housing recovery may be faltering. Sales of previously owned homes unexpectedly dropped 7.2 percent in January after a record decrease a month earlier, according to the Realtors report on Feb. 26. New-home sales fell to the lowest on record, the Commerce Department said Feb. 24.
The housing market will “follow a similar pattern” to recovery as it did in the late 1980s and early 1990s, which both took “several years,” Toll Brothers Inc. Chief Executive Officer Robert Toll said in a statement Feb. 24.
The company, the largest U.S. luxury-home builder, said its orders almost doubled in the first quarter compared with a year earlier. It projected it will sell between 2,100 and 2,750 homes in fiscal 2010 at an average price of $540,000 to $560,000.
Builder shares have beat the broader market so far this year after another provision in the legislation extending the tax credit allowed construction companies to use losses incurred in 2008 and 2009 to recoup taxes on profits going back as many as five years, three more years than usual. Lennar Corp., KB Home and Ryland Group Inc. are among builders that have reported quarterly profits because of the tax refunds.
Builder Shares
The Standard & Poor’s Supercomposite Homebuilding Index has increased 12 percent this year, compared with a 0.3 percent rise in broader S&P 500.
Billionaire Warren Buffett said last week the U.S. residential real estate slump will end by about 2011.
Filed under: economics by Pascal