Purchases of existing homes rose 2.5 percent to a 5 million annual rate after dropping 9.6 percent in February, according to the median forecast of 60 economists surveyed by Bloomberg News. Another report may show builders began work last month on 8.6 percent more houses following a 23 percent plunge.
We’re unlikely to see any significant, fundamental rebound in housing in the near term,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut.
Housing, which pushed the economy into the recession, remains the weak link in the recovery and continues to weigh on consumer spending as home prices fall. Manufacturing, which has been at the forefront of the expansion, may cool in coming months as producers face supply shortages caused by last month’s earthquake and the nuclear crisis in Japan.
“As we head into the second quarter, there is a tremendous amount of uncertainty about where things are headed,” said Stanley.
The National Association of Realtors’ report on sales of previously owned homes is due April 20. The drop in purchases in February sent the median price of existing houses to the lowest level since 2002.
Distressed Properties
Distressed properties accounted for 39 percent of sales, and the share of all cash transactions was 33 percent, the highest since at least August 2008, when the agents’ group began tracking the monthly figure.
CoreLogic Inc. last month estimated about 1.8 million homes were delinquent or in foreclosure, a so-called “shadow inventory” set to add to the 3.5 million existing homes already on the market.
A glut of unsold properties may cause prices to keep falling, leaving little incentive for homebuilders to begin construction of new homes.
A report from the Commerce Department on April 19 will show builders began work last month on 520,000 houses at an annual rate, up from 479,000 in February, according to economists’ forecasts. February’s total was the second-lowest in data going back to 1959, behind April 2009’s 477,000 rate.
Building permits rose 1.1 percent to a 540,000 annual pace last month from 534,000 in February, according to the survey. Permits reached a record low 522,000 pace in March 2009.
Builder Pessimism
Builders remain pessimistic. The National Association of Home Builders’ confidence index held at 17 this month, according to the median forecasts of economists surveyed before the April 18 report. A reading under 50 means a majority of builders view conditions as poor.
KB Home, the Los Angeles-based homebuilder that targets first-time buyers, this month reported a bigger-than-expected loss for the quarter ended Feb. 28 as orders plunged.
“We do not anticipate a net profit for 2011,” Chief Executive Officer Jeffrey Mezger said during a conference call with analysts on April 5. “The economy is continuing to improve. Even so, this recovery has yet to include significant job growth and has not spilled over into housing.”
Homebuilders have underperformed the broader stock market. The Standard & Poor’s Supercomposite Homebuilder Index has gained 0.8 percent so far this year, compared with a 4.9 percent increase for the broader S&P 500 Index.
Leading Index
The index of U.S. leading economic indicators, due April 21, may show the recovery will slow. The index rose 0.3 percent in March, compared with a 0.8 percent gain in February, according to the median estimate of economists surveyed by Bloomberg before the Conference Board report.
The Federal Reserve Bank of Philadelphia’s general economic index, due the same day, may show manufacturing in the region moderated this month after expanding in March at the fastest pace in 27 years. The gauge fell to 36 from 43.4 in March, according to the median estimate of economists surveyed. Readings greater than zero signal growth.
Also on April 21, the Labor Department may report that initial claims for jobless benefits fell to 393,000 last week from 412,000 the prior week, a sign of improving labor market conditions.(source Bloomberg News ) For the latest updates PRESS CTR + D or visit Stock Market news Today
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