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By Jeanna Smialek
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Sales of previously owned U.S. homes probably rose in February to the highest level in more than three years, sustaining a rebound that is bolstering growth, economists said before a report today.
Purchases increased 1.6 percent to a 5 million annualized rate, the most since November 2009, according to the median forecast of 77 economists surveyed by Bloomberg. Other data may show an index of leading economic indicators advanced for a third straight month. Growing demand for homes combined with limited supply is pushing property values up, leading to gains in household confidence and wealth that are helping propel consumer spending. Easier access to credit and bigger gains in employment may be needed to give the housing market an additional boost and ensure it will keep contributing to the economy.
Housing “is finally in recovery mode,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “Housing as a share of the economy is small, but the roots are very deep and very broad.”
The Realtors’ report is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.85 million to 5.15 million.
Federal Reserve policy makers yesterday said they will continue to buy securities at a pace of $85 billion a month to spur economic growth and reduce unemployment.
The central bank said it “continues to see downside risks to the economic outlook,” according to the statement. It also said “the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive,” acknowledging that thefederal budget cuts triggered at the start of the month may restrain growth.
Market Peak
Existing-home sales are counted when a contract closes and have rebounded since reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005.
Resales accounted for about 93 percent of the residential market in 2012, and a total of 4.66 million previously owned houses were sold last year. That was the most since 2007 and up 9.4 percent from 2011.
Company results suggest the improvement in residential real estate will continue. Lennar Corp. (LEN), the third-largest U.S. homebuilders by revenue, said earnings and orders rose in the fiscal first quarter.
“Current market conditions are driven by strong demand resulting from low interest rates and attractive home prices, which have led to very affordable monthly payments, compared to increasing rental rates,” Chief Executive Officer Stuart Miller said in a statement yesterday. New orders, deliveries and backlog have “shown strong increases,” he said.
Housing Starts
Housing starts climbed 0.8 percent last month to a 917,000 annualized pace, Commerce Department data showed this week. Permits for future construction rose 4.6 percent to a 946,000 rate, the most since June 2008. The gains are filtering through to related companies and industries such as Plum Creek Timber Co. Inc. (PCL) in Seattle.
“A year ago, people would have been in the room wondering, when will housing starts recover and boy, what a difference a year makes,” David Lambert, chief financial officer for Plum Creek, said in a March 5 presentation. “Right now, we see housing is kind of the one growth engine in the U.S. economy.”
The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) has surged 71.6 percent in the 12 months through yesterday, outpacing an 10.9 percent gain in the broader S&P 500. (SPX)
Building permits are one of the 10 components of the Conference Board’s index of leading indicators. Figures due at 10 a.m. from the New York-based research group may show the gauge climbed 0.4 percent in February, according to economists surveyed by Bloomberg. The gain, following a 0.2 percent increase in January, suggests the world’s largest economy will keep expanding this year.
Jobless Claims
Another report may show claims for jobless benefits rose last week after unexpectedly falling to the lowest level in almost two months in the prior period, economists forecast ahead of 8:30 a.m. data from the Labor Department.
Also today, 10 a.m. figures from the Federal Reserve Bank of Philadelphia may show manufacturing in the region shrank at a slower pace in March.
The real-estate agents’ group reported last month that the median price of an existing home was $173,600 in January, up 12.3 percent from the same month in 2012. It was the biggestyear-over-year gain since November 2005.
Rising property values last year pulled 1.7 million households out of negative equity, meaning owners no longer owe more on their mortgage than the house is worth, according to CoreLogic Inc., a data provider based in Irvine, California. Nonetheless, more than 10 million homes, or 21.5 percent of all residential properties with a mortgage, remain underwater, CoreLogic reported this week.
Household wealth rose in the fourth quarter to the highest level in five years, propelled by rebounding home prices, Fed figures also showed this month.
Bloomberg Survey
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Initial Exist Exist LEI
Claims Homes Homes
,000’s Mlns MOM% MOM%
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Date of Release 03/21 03/21 03/21 03/21
Observation Period 16-Mar Feb. Feb. Feb.
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Median 340 5.00 1.6% 0.4%
Average 341 5.00 1.6% 0.4%
High Forecast 352 5.15 4.7% 0.8%
Low Forecast 325 4.85 -1.4% -0.1%
Number of Participants 47 77 77 47
Previous 332 4.92 0.4% 0.2%
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4CAST 335 5.03 2.2% ---
ABN Amro 340 5.02 2.0% ---
Action Economics 337 4.97 1.0% -0.1%
Ameriprise Financial 345 4.98 1.2% 0.4%
Banca Aletti 337 --- --- ---
Bank of the West 342 4.98 1.2% 0.3%
Bank of Tokyo-Mitsubishi --- 5.00 1.6% 0.3%
Bantleon Bank AG --- 5.02 2.0% 0.3%
Barclays 350 4.97 1.0% 0.6%
Bayerische Landesbank --- --- --- 0.4%
BBVA 338 4.99 1.4% 0.4%
BMO Capital Markets 340 5.04 2.4% 0.3%
BNP Paribas 352 5.05 2.6% ---
BofA Merrill Lynch 350 4.95 0.6% ---
Capital Economics --- 5.00 1.6% 0.4%
CIBC World Markets --- 5.04 2.4% ---
Citi 335 4.95 0.6% 0.5%
ClearView Economics --- 5.15 4.7% ---
Commerzbank AG 340 4.92 0.0% 0.3%
Credit Agricole CIB --- 5.00 1.6% ---
Credit Suisse 325 5.10 3.7% 0.6%
Daiwa Securities America --- 4.98 1.2% 0.4%
Danske Bank A/S --- 5.04 2.4% ---
DekaBank --- 5.05 2.6% 0.3%
Desjardins Group --- 5.10 3.7% 0.5%
Deutsche Bank Securities 340 5.00 1.6% 0.3%
Deutsche Postbank AG --- --- --- 0.3%
First Trust Advisors 345 4.98 1.2% 0.2%
FTN Financial --- 4.95 0.6% ---
Goldman, Sachs & Co. --- 4.86 -1.2% ---
Hammer Partners SA --- 4.99 1.4% 0.3%
Helaba 340 5.00 1.6% 0.3%
High Frequency Economics 340 4.92 0.0% 0.6%
HSBC Markets 352 5.05 2.6% ---
Hugh Johnson Advisors 350 4.95 0.6% 0.3%
IDEAglobal 340 4.85 -1.4% 0.3%
IHS Global Insight 340 4.96 0.8% 0.2%
Informa Global Markets 345 4.95 0.6% 0.3%
ING Financial Markets --- --- --- 0.3%
Intesa Sanpaolo --- 5.10 3.7% ---
J.P. Morgan Chase 340 5.00 1.6% ---
Janney Montgomery Scott --- 4.97 1.0% 0.8%
Jefferies 340 4.99 1.4% 0.8%
John Hancock Financial 349 5.00 1.5% ---
Landesbank Berlin --- 5.08 3.2% 0.6%
Landesbank BW --- 5.00 1.6% ---
Lloyds Tsb Bank 345 5.07 3.1% ---
Maria Fiorini Ramirez 335 5.00 1.6% ---
Market Securities --- 4.87 -1.0% ---
MET Capital Advisors --- 5.10 3.7% ---
Mizuho Securities 340 4.97 1.0% 0.4%
Modal Asset --- 5.11 3.9% ---
Moody’s Analytics 339 5.04 2.4% ---
Morgan Stanley & Co. --- 5.04 2.4% 0.3%
National Bank Financial --- 5.00 1.6% ---
Natixis --- 4.97 1.0% ---
Nomura Securities --- 4.90 -0.4% 0.6%
OSK Group/DMG --- 5.03 2.2% ---
Oxford Economics 350 4.88 -0.8% ---
Pantheon Macroeconomic 340 5.00 1.6% 0.6%
Pierpont Securities 335 5.03 2.2% ---
PNC Bank --- 5.05 2.6% 0.8%
Prestige Economics --- 5.02 2.0% ---
Raiffeisenbank International --- 5.00 1.6% ---
Raymond James 335 4.96 0.8% 0.5%
RBC Capital Markets 345 4.90 -0.4% ---
RBS Securities 337 5.05 2.6% ---
Regions Financial --- 5.05 2.6% 0.6%
Renaissance Macro Research 340 5.00 1.6% 0.4%
Santander --- 4.90 -0.4% ---
Scotiabank 340 5.00 1.6% ---
SMBC Nikko Securities --- 4.90 -0.4% 0.5%
Societe Generale 333 4.85 -1.4% 0.5%
Southbay Research 338 --- --- ---
Standard Chartered Bank 348 5.05 2.6% ---
Stone & McCarthy 345 5.10 3.7% 0.3%
TD Securities 345 5.10 3.7% 0.3%
UBS 330 5.00 1.6% 0.5%
UniCredit Research --- --- --- 0.3%
University of Maryland 340 4.90 -0.4% 0.0%
Wells Fargo & Co. --- 4.96 0.8% 0.6%
Westpac Banking Co. 345 5.02 2.0% ---
Wrightson ICAP 335 5.05 2.6% 0.6%
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To contact the reporter on this story: Jeanna Smialek in Washington atjsmialek1@bloomberg.net
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