| New-Home Sales in U.S. Climbed 0.3% to 352,000 Pace |
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By Bob Willis May 28 (Bloomberg) -- Purchases of new homes in the U.S. rose in April for the second time in three months as lower prices and cheaper financing stabilized demand. Sales increased 0.3 percent to an annual pace of 352,000, lower than forecast, after a 351,000 rate in March, the Commerce Department said today in Washington. The median sales price decreased 15 percent from April 2008, while the number of homes on the market fell to the lowest level in almost eight years. Near record-low mortgage rates, bargain pricing and tax credits for first-time buyers are helping to put a floor under purchases after almost four years of declines. Still, rising unemployment and tight credit indicate sales will not rebound much in coming months, even as the worst recession in half a century begins to ease. “The good news is probably the continued improvement in inventory levels,” said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. “We’ll take the improvement in the new-home market as a sign we’re getting closer to the bottom and we might see some stability in the housing market by the summer.” Treasuries were higher and stocks fell. The benchmark 10- year note yielded 3.65 percent as of 10:15 a.m. in New York, down 9 basis points from yesterday. The Standard & Poor’s 500 Index fell 0.4 percent to 889.57. Economists’ Estimates New-home sales were projected to rise 1.1 percent to an annual rate of 360,000, according to the median estimate in a Bloomberg survey. Forecasts ranged from 330,000 to 400,000. The median price of a new home decreased to $209,700 from $246,400 in April 2008. Still, last month’s value was up from March. Another Commerce report today showed orders for durable goods in April hovered near the lowest level in 13 years as demand for business equipment weakened, signaling that investment will be one of the last areas of the economy to recover. Sales of new homes were down 34 percent from April 2008. They reached a record-low 329,000 in January, down 76 percent from the July 2005 peak. Builders had 297,000 houses on the market last month, down 4.2 percent from March and the fewest since May 2001. With the decline, it would take 10.1 months to sell all homes at the current sales pace, the lowest level since July and down from 10.6 months in March. Regional Breakdown The gain in sales in April was led by a 1.9 percent increase in the South. Purchases fell 3.8 percent in the West and were little changed in the Northeast and Midwest. Other housing data in recent weeks have pointed to stability. A report from the National Association of Realtors yesterday showed purchases of existing homes in April rose for the second time in three months, gaining 2.9 percent to an annual rate of 4.68 million. Homebuilder confidence climbed to an eight-month high in May. Mortgage applications to purchase homes are also up 9 percent from February’s nine-year low. Tax credits of $8,000 for first-time homebuyers and near record low borrowing costs following Federal Reserve efforts to drive down rates are helping to make buying more affordable. Rates on 30-year fixed loans fell to 4.78 percent in April, the lowest level since Freddie Mac began keeping records in 1972. Foreclosures Still, record foreclosures have drawn buyers to the existing-home market and away from new houses. Purchases of distressed properties accounted for almost half of all sales in recent months, according to the National Association of Realtors. New-home sales now make up about 7 percent of the total market, down from about 16 percent at the peak of the housing boom in mid-2005. “Prospective new-home buyers are likely to find better values in the inventory of existing and foreclosed properties,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. Builders are still taking a hit. D.R. Horton Inc., the largest U.S. homebuilder by market value, this month reported a quarterly loss that exceeded analysts’ estimates as orders plummeted 45 percent from a year earlier. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
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