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Title: Sales of U.S. Existing Homes Jump More Than Estimated to Seven-Month High
Source:
Bloomberg
URL Source: http://noir.bloomberg.com/apps/news ... 0601087&sid=ajMgUtC1grX4&pos=1
Published: Jan 20, 2011
Author: By Shobhana Chandra
Post Date: 2011-01-20 11:27:49 by Brian S
Keywords: None
Views: 886
Comments: 1
Jan. 20 (Bloomberg) -- Sales of U.S. previously owned homes jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing up further. Purchases of existing houses, which are tabulated when a contract closes, increased 12 percent to a 5.28 million annual rate, the most since May and exceeding the highest estimate of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price dropped 1 percent from a year earlier, and the share of sales represented by foreclosures climbed. Buyers are returning to the housing market after a government tax credit expired in the middle of 2010, indicating the drop in prices and cheap lending rates are making homes more affordable. At the same time, unemployment in excess of 9 percent and record foreclosures are among concerns that have prompted Federal Reserve policy makers to follow through with a second round of quantitative easing. “Home sales are improving slowly, but surely,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We really need to see job creation pick up to ensure housing continues to recover. Housing clearly is still a weak spot in the economy.” For all of last year, purchases decreased to 4.91 million, the fewest since 1997. Improving Economy Other reports showed a drop in the number of Americans filing claims for jobless benefits, a bigger-than-projected increase in the index of leading indicators and continued factory expansion in the area covered by the Fed Bank of Philadelphia. Applications for jobless benefits decreased 37,000 in the week ended Jan. 15, the biggest decline since February 2010, to 404,000, Labor Department figures showed. The Conference Board’s gauge of the outlook for the next three to six months rose 1.0 percent after a 1.1 percent gain in November, the New York-based group said. The December reading, the sixth consecutive monthly increase, exceeded the 0.6 percent gain in the median forecast of economists surveyed. The Fed Bank of Philadelphia’s general economic index fell to 19.3 from 20.8 last month. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Shares Down Stocks fell, with the Standard & Poor’s 500 Index dropping a second day, as concern China will raise interest rates weighed on commodity producers, overshadowing better-than-estimated jobless-claims and home-sale reports. The 500 Index fell 0.5 percent to 1,275.8 at 10:30 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.40 percent from 3.34 percent late yesterday. Existing home sales were forecast to rise to a 4.87 million rate in December, according to the median of 73 forecasts in a Bloomberg News survey. Economists’ estimates ranged from 4.5 million to 5.07 million after November’s 4.68 million pace. The median price decreased to $168,800 from $170,500 in December 2009. The number of previously owned homes on the market dropped 4.2 percent to 3.56 million. At the current sales pace, it would take 8.1 months to sell those houses compared with 9.5 months at the end of the prior month. Month’s supply in the eight months to nine months range is consistent with stable home prices, the group has said. Higher Rates The average rate on a 30-year fixed mortgage was 4.74 percent this week, according to figures from Freddie Mac. The rate reached 4.17 percent in early November, the lowest since records began in 1972. The jump in rates “provided some urgency” to buyers, Lawrence Yun, the Realtors’ group’s chief economist said in a press conference. The initial increase in borrowing costs “generally induces people to make the decision earlier,” said Yun, although a sustained increase may eventually hurt demand. The share of sales that reflected distressed properties rose to 36 percent in December from 33 percent in prior months, said Yun. Increasing demand for foreclosed properties accounted for the bulk of the gain, he said, which also included more short sales. The housing industry is trying to stabilize after demand see-sawed due to a buyer tax incentive of as much as $8,000, which required contracts to be signed by April 30 of 2010 and closed by the end of September. Existing-home sales slumped to a 3.84 million rate in July 2010, the weakest in a decade’s worth of record keeping, reflecting the expiration of the credit. Credit’s Influence Earlier, purchases had surged to an almost three-year high 6.49 million pace in November 2009, the month the tax credit was originally due to end. It was subsequently extended. A lack of sales and an overhang of unsold houses are discouraging builders from taking on projects. Housing starts fell in December to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed yesterday. Lennar Corp., the third-largest U.S. homebuilder by revenue, is among companies bracing for a slow rebound. The Miami-based builder on Jan. 11 reported fourth-quarter profit that beat analyst estimates on cost cuts and earnings from its distressed-investing unit. “The housing recovery will traverse a long and bumpy road,” Stuart Miller, chief executive officer, said in a conference call that day. Still, “we’ve seen some early signs of gradual stabilization in the market.” Jobless Rate An unemployment rate of at least 9.4 percent since May 2009 is fueling a supply of distressed properties. The number of homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, according to RealtyTrac Inc. an Irvine, California-based data seller. “Activity in residential real estate and new home construction remained slow across all Districts,” the Fed said Jan. 12 in its Beige Book report, based on anecdotal information that central bankers will use to determine policy at their meeting next week.
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#1. To: Brian S (#0)
LOL. More propaganda!!! Ain't THAT a surprise!!! Ok, here's REALITY: Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year. Companies like KB Homes and Lennar Corp. project demand will be slow to rebound as elevated unemployment and mounting foreclosures discourage buyers. While low borrowing costs and falling prices are helping revive sales from last year’s post tax-credit slump, Federal Reserve policy makers are concerned housing may undermine the economic expansion. “With sales still near record lows and a lot of unsold properties in the market, there’s very little reason for builders to add more homes to the supply,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who had forecast starts would drop to a 527,000 rate. “Housing remains a key downside risk to the economy.” Bank Earnings Stocks fell on disappointment over the drop in starts and on Goldman Sachs Group Inc. earnings that failed to beat analysts’ estimates. The Standard & Poor’s 500 Index declined 1 percent to 1,281.92 at the 4 p.m. close in New York. The S&P Supercomposite Homebuilding Index decreased 2.9 percent. For all of last year, starts rose 6.1 percent from 2009 to 587,600, the second- fewest in records dating back to 1959. The Bloomberg survey forecast was based on a poll of 72 economists. Estimates ranged from 510,000 to 588,000. November’s pace was revised to 553,000 from a previous estimate of 555,000. Permits jumped 17 percent to a 635,000 annual rate in December, the report showed. Building code changes took effect on Jan. 1 in California, Pennsylvania and New York, the Commerce Department said. Permits surged by 81 percent in the Northeast and by 44 percent in the West. They rose 3.3 percent in the Midwest and dropped 7.6 percent in the South. Single-Family Houses Construction of single-family houses decreased 9 percent to a 417,000 rate in December from the prior month, the fewest since May 2009. Work on multifamily homes, such as townhouses and apartment builders, rose 18 percent to an annual rate of 112,000. It marked the first increase in four months. Three of four regions dropped last month, led by a 38 percent decline in the Midwest. Weather also played a role. Last month was the seventh snowiest December in a century’s worth of records for the contiguous U.S., based on satellite observations, according to the National Climatic Data Center. About 55 percent of the country had snow by Dec. 27th. It was the third wettest December on record in the West. Builders had little incentive to take on work when house purchases slumped in mid-2010 following the expiration of a tax incentive of as much as $8,000, which required contracts to be signed by April 30 of 2010 and closed by the end of September. Fed Policy Fed policy makers plan to go ahead with a second round of quantitative easing that will pump another $600 billion into financial markets by June in a bid to keep borrowing costs low and spur growth. Boston Fed President Eric Rosengren is among central bankers concerned growth won’t exceed 4 percent this year because the housing recovery is likely to be weaker than usual, given the tightening of lending standards and high vacancy rates. “If housing-related growth is not going to boost the recovery this time around, we may need policy -- particularly monetary policy -- to continue playing a stimulative role,” Rosengren said in a Jan. 14 speech. Foreclosures may further discourage construction and hurt prices. The number of homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures, RealtyTrac Inc. said this month. Builder Concern KB Home, a Los Angeles-based builder that targets first- time homebuyers, on Jan. 7 said cost cuts helped it achieve a fourth-quarter profit, and it is “cautious” about this year. “Entering 2011, housing market conditions remain difficult,” Jeffrey Mezger, chief executive officer, said in a statement. While “the overall economy has started to recover, the lack of improvement in employment and consumer confidence is likely to continue to hinder a sustained housing recovery.” Developers’ confidence stagnated in January, reflecting a lack of credit that threatens to hold back construction. The National Association of Home Builders/Wells Fargo sentiment index held at 16, the same as the past two months, figures showed yesterday. Readings less than 50 mean more respondents said conditions were poor. Home prices have declined each month from August to October, the last month reported, according to the S&P/Case- Shiller index of property values, which tracks 20 U.S. cities. In the end, the Party would announce that two and two made five, and you would have to believe it. ... The heresy of heresies was common sense. ME: Thanks for admitting that you ARE trying to spin this (AZ shooting, and terrorism) onto Palin, and conservatives in general. ME: THERE IS NO MORE MONEY. Real Estate Housing Starts in U.S. Fell More Than Forecast in December to One-Year Low
-- George Orwell, 1984 --
Brian S(ocialist): I have never hidden that fact...
GO65: There will be no more money when the U.S. dollar has no value, until that time we can keep printing more. 
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