Sales of Existing Homes in U.S. Probably Increased in January
A home for sale in Ossining
Feb. 25 (Bloomberg) -- Sales of U.S. previously owned homes probably rose in January as record foreclosures brought bargain hunters into the market, economists said before a private group’s report today.
Purchases increased 1.1 percent to a 4.79 million annual rate, according to the median of 70 forecasts in a Bloomberg News survey. The rate reached a record-low 4.45 million in November.
President Barack Obama has unveiled plans aimed at stemming foreclosures and declining home vales that are at the core of the economic slump. Still, the market is likely to keep sliding as job losses climb and credit remains hard to get until the administration’s initiatives take hold.
“The housing market looks set to weaken further,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said in a report to clients. While the government’s action “is certainly a step in the right direction,” she said, “there is simply no silver bullet to stop the corrosion” soon.
The National Association of Realtors is scheduled to release the home resales report at 10 a.m. in Washington. Estimates in the Bloomberg News survey ranged from rates of 4.5 million to 4.91 million.
Sales increases in January and December would be the first back-to-back in two years.
Prices Plunging
The median price of an existing home dropped 15.3 percent in December from a year earlier, the biggest decline on record, and distressed properties accounted for about 45 percent of sales, the Realtors group said last month. The group’s affordability index, which takes into account median prices and household incomes, jumped to a record for the month.
Prices are likely to keep falling. Home foreclosures were up 17.8 percent in January from a year earlier, according to RealtyTrac Inc., an Irvine, California-based seller of default data. A total of 274,399 properties got a default or auction notice or were seized by banks, the 10th straight month that foreclosures topped 250,000.
Property values were down about 27 percent in December from their 2006 peak, according to the S&P/Case-Shiller index covering 20 metropolitan areas released yesterday.
Obama last week introduced a plan to help as many as 9 million people restructure their mortgages to avoid foreclosures. The Treasury Department last week also said it will double the amount of stock purchases of Fannie Mae and Freddie Mac to as much as $200 billion for each company.
‘Unprecedented’
“The unprecedented nature of the housing recession and credit crisis has led to an unprecedented policy response,” Barclays’ Meyer said. “Ultimately, we believe that policy makers will prevail, but it will be a tough battle.”
Mounting foreclosures triggered a credit crisis which in turn has deepened the U.S. recession that began in December 2007. Economists surveyed by Bloomberg this month projected the economy will continue to contract at least through the first half of this year and that unemployment will rise to a 25-year high of 8.8 percent by the end of 2009.
“The fact you still have payroll declines continues to suggest you have a lot of people who may still have to sell their home, be it under water or not,” said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York.
The competition from distressed sales is hurting builders. Standard Pacific Corp., based in Irvine, California, reported its ninth straight quarterly loss on Feb. 13. New home deliveries fell 47 percent, backlogs declined 50 percent and the cancellation rate was 33 percent, the company said.
“We saw our sales absorption rate, our cancellation rate and general traffic levels deteriorate beyond normal seasonal changes,” Chief Executive Officer Ken Campbell said in a statement. He said he expected home prices to decline further.
Bloomberg Survey
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Exist
Homes
Mlns
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Date of Release 02/25
Observation Period Jan.
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Median 4.79
Average 4.77
High Forecast 4.91
Low Forecast 4.50
Number of Participants 70
Previous 4.74
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4CAST Ltd. 4.70
Action Economics 4.70
AIG Investments 4.76
Aletti Gestielle SGR 4.55
Ameriprise Financial Inc 4.71
Argus Research Corp. 4.85
Bank of Tokyo- Mitsubishi 4.87
Bantleon Bank AG 4.85
Barclays Capital 4.85
BBVA 4.75
BMO Capital Markets 4.65
BNP Paribas 4.65
Briefing.com 4.80
Calyon 4.80
Castlestone Management LT 4.60
CIBC World Markets 4.85
Citi 4.68
ClearView Economics 4.85
Commerzbank AG 4.90
Credit Suisse 4.85
Daiwa Securities America 4.80
Danske Bank 4.73
DekaBank 4.90
Desjardins Group 4.65
Deutsche Bank Securities 4.50
DZ Bank 4.65
First Trust Advisors 4.71
Fortis 4.80
FTN Financial 4.70
Goldman, Sachs & Co. 4.69
Helaba 4.80
Herrmann Forecasting 4.70
High Frequency Economics 4.90
Horizon Investments 4.90
HSBC Markets 4.90
IDEAglobal 4.90
IHS Global Insight 4.78
Informa Global Markets 4.70
ING Financial Markets 4.91
Insight Economics 4.75
Intesa-SanPaulo 4.80
J.P. Morgan Chase 4.84
Janney Montgomery Scott L 4.64
Landesbank Berlin 4.90
Lloyds TSB 4.70
Maria Fiorini Ramirez Inc 4.70
Merrill Lynch 4.50
MFC Global Investment Man 4.75
Moody’s Economy.com 4.70
Morgan Stanley & Co. 4.80
National Bank Financial 4.84
Natixis 4.80
Newedge 4.79
Nomura Securities Intl. 4.77
PNC Bank 4.65
Raymond James 4.65
RBS Greenwich Capital 4.80
Ried, Thunberg & Co. 4.90
Schneider Foreign Exchang 4.86
Scotia Capital 4.80
Stone & McCarthy Research 4.81
TD Securities 4.80
Thomson Reuters/IFR 4.80
Unicredit MIB 4.75
University of Maryland 4.86
Wachovia Corp. 4.60
Wells Fargo & Co. 4.70
WestLB AG 4.84
Westpac Banking Co. 4.79
Wrightson Associates 4.90
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To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net
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