Pending Home Sales Rose 7.3% in November

December 30, 2011, 3:31 PM EST By Timothy R. Homan

Dec. 29 (Bloomberg) -- The number of Americans signing contracts to buy previously owned homes rose more than forecast in November as falling prices and low borrowing costs boosted demand.

The index of pending home sales increased 7.3 percent to the highest level since April 2010 after climbing 10.4 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey.

The industry that triggered the 18-month recession that ended in June 2009 is showing signs of stabilizing as construction picks up, builder confidence improves and the number of houses on the market declines. Nonetheless, another wave of foreclosures may weigh on real-estate values next year.

“It looks like buyers are becoming more confident and are attracted to record-low mortgage rates,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. At the same time, he said, “activity still looks depressed by historical standards.”

Estimates for pending home sales ranged from a drop of 3 percent to an increase of 11 percent, according to the median of 30 forecasts in the Bloomberg survey.

Pending home sales were up 6.9 percent from November 2010.

All four regions showed an increase in contract signings from a month earlier, led by a 14.9 percent surge in the West and an 8.1 percent jump in the Northeast. Pending sales climbed 4.3 percent in the South and 3.3 percent in the Midwest.

Housing Affordability

“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” NAR chief economist Lawrence Yun said in a statement accompanying the release. “Some of the increase in pending sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”

Today’s report showed an index level for pending home sales of 100.1 on a seasonally adjusted basis. A reading of 100 is consistent with the average level of contract activity in 2001 and coincides with “historically healthy” home-buying traffic, according to the NAR.

Because they track contract signings, pending home sales are considered a leading indicator. Existing-home sales are tabulated when a contract closes, typically a month or two later.

Home Sales

Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said Dec. 21.

Purchases of new single-family properties advanced 1.6 percent to a 315,000 annual pace, a seven-month high, figures from the Commerce Department showed Dec. 23. The increase pushed the number of new homes on the market to a record low.

“As the stabilization process moves forward, we are seeing inventory levels continuing to ease in many of our markets, which is a prerequisite for a housing recovery,” Jeffrey Mezger, chief executive officer of Los Angeles-based KB Home, said in a Dec. 21 conference call with analysts.

Even with the increase in sales, residential real estate prices continue to fall, showing a broad-based decline that indicates the market continues to be weighed down by foreclosures.

Home Values

The S&P/Case-Shiller index of property values in 20 cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said this week. The median forecast of economists in a Bloomberg survey projected a 3.2 percent decrease.

The threat of continued declines could keep potential buyers waiting until they believe the market has bottomed, even as cheaper properties may make purchasing a home more affordable.

U.S. policy makers have initiated programs designed to revive the housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

At the Federal Reserve, officials this month reiterated that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

--Editors: Carlos Torres, Vince Golle

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Pending Home Sales Rose 7.3% in November

December 30, 2011, 12:14 AM EST By Timothy R. Homan

Dec. 29 (Bloomberg) -- The number of Americans signing contracts to buy previously owned homes rose more than forecast in November as falling prices and low borrowing costs boosted demand.

The index of pending home sales increased 7.3 percent to the highest level since April 2010 after climbing 10.4 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey.

The industry that triggered the 18-month recession that ended in June 2009 is showing signs of stabilizing as construction picks up, builder confidence improves and the number of houses on the market declines. Nonetheless, another wave of foreclosures may weigh on real-estate values next year.

“It looks like buyers are becoming more confident and are attracted to record-low mortgage rates,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. At the same time, he said, “activity still looks depressed by historical standards.”

Estimates for pending home sales ranged from a drop of 3 percent to an increase of 11 percent, according to the median of 30 forecasts in the Bloomberg survey.

Pending home sales were up 6.9 percent from November 2010.

All four regions showed an increase in contract signings from a month earlier, led by a 14.9 percent surge in the West and an 8.1 percent jump in the Northeast. Pending sales climbed 4.3 percent in the South and 3.3 percent in the Midwest.

Housing Affordability

“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” NAR chief economist Lawrence Yun said in a statement accompanying the release. “Some of the increase in pending sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”

Today’s report showed an index level for pending home sales of 100.1 on a seasonally adjusted basis. A reading of 100 is consistent with the average level of contract activity in 2001 and coincides with “historically healthy” home-buying traffic, according to the NAR.

Because they track contract signings, pending home sales are considered a leading indicator. Existing-home sales are tabulated when a contract closes, typically a month or two later.

Home Sales

Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said Dec. 21.

Purchases of new single-family properties advanced 1.6 percent to a 315,000 annual pace, a seven-month high, figures from the Commerce Department showed Dec. 23. The increase pushed the number of new homes on the market to a record low.

“As the stabilization process moves forward, we are seeing inventory levels continuing to ease in many of our markets, which is a prerequisite for a housing recovery,” Jeffrey Mezger, chief executive officer of Los Angeles-based KB Home, said in a Dec. 21 conference call with analysts.

Even with the increase in sales, residential real estate prices continue to fall, showing a broad-based decline that indicates the market continues to be weighed down by foreclosures.

Home Values

The S&P/Case-Shiller index of property values in 20 cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said this week. The median forecast of economists in a Bloomberg survey projected a 3.2 percent decrease.

The threat of continued declines could keep potential buyers waiting until they believe the market has bottomed, even as cheaper properties may make purchasing a home more affordable.

U.S. policy makers have initiated programs designed to revive the housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

At the Federal Reserve, officials this month reiterated that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

--Editors: Carlos Torres, Vince Golle

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Sales of U.S. New Homes in November Rise to 315,000 Rate

December 25, 2011, 12:32 AM EST By Timothy R. Homan

(Updates with economist’s comment in fourth paragraph.)

Dec. 23 (Bloomberg) -- Sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market.

Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, figures from the Commerce Department showed today in Washington. The gain pushed the number of new homes on the market to a record low.

The industry that precipitated the 18-month recession that ended in June 2009 is on the mend as construction picks up, builder confidence improves and inventories of existing homes decline. At the same time, another wave of foreclosures may weigh on real estate values next year.

“All of the housing numbers have looked a lot better recently,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Things aren’t getting any worse now and that’s an improvement.”

The November pace matched the median of 73 economists’ projections in a Bloomberg News survey. Estimates ranged from 298,000 to 350,000. The government revised October demand to a 310,000 rate from a previously reported 307,000.

Stocks held gains after the report, with the Standard & Poor’s 500 Index climbing 0.4 percent to 1,258.71 at 10:14 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 2.01 percent from 1.95 percent late yesterday.

Separate figures today showed personal spending rose less than forecast and an increase in orders for big-ticket items. Purchases rose 0.1 percent for a second month, according to the Commerce Department. Incomes also grew 0.1 percent, the weakest in three months, after a 0.4 percent rise in October.

Factory Orders

Orders for durable goods jumped 3.8 percent in November, led by a surge in bookings for aircraft, the agency also said. Demand for business equipment dropped 1.2 percent in November, the most since January.

The increase in new-home purchases was paced by a 12.9 percent jump in the South and a 7.5 percent gain in the Midwest Demand plunged 26.3 percent in the Northeast to the lowest on record. Sales slumped 16.9 percent in the West.

The median price of a new house purchased last month fell 2.5 percent from November 2010 to $214,100, the cheapest in a year, today’s report showed.

The supply of homes at the current sales rate dropped to 6 months’ worth, the lowest since March 2006, from 6.2 months in October. There were 158,000 new houses on the market at the end of last month, the fewest since record-keeping began in 1963.

Weakest Year

Still, 2011 may surpass last year as the weakest ever for new-home sales. Demand is on pace to reach 304,000 this year, less than the 323,000 in 2010 that was the lowest since data- keeping began, according to Bloomberg calculations.

Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said this week. The group revised down figures going back to 2007 by an average 14 percent, putting them more in line with other measures of demand.

New-home sales, which are tabulated when contracts are signed, have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing houses are calculated when a deal closes about a month or two later.

Builders increased work on new projects last month. Housing starts rose 9.3 percent to a 685,000 rate in November, the fastest pace since April 2010, Commerce Department data show. That compares with last year’s tally of 587,000, the second- fewest on record after 2009’s record low of 554,000.

KB Home

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, this week reported a decline in quarterly profit and gross margins weaker than the company forecast earlier.

At the same time, the Los Angeles-based builder said net orders increased 38 percent in the fourth quarter from the same three months last year.

Policy makers are pushing programs aimed at reviving the U.S. housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

Federal Reserve officials reiterated at a meeting this month that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

--Editor: Vince Golle

Company News:

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Employment Index in U.S. Jumped to Three-Year High in November

December 07, 2011, 7:36 AM EST By Shobhana Chandra

Dec. 5 (Bloomberg) -- A measure of job prospects in the U.S. climbed in November to a three-year high, helped by growth in the world’s largest economy.

The Conference Board’s Employment Trends Index jumped 1.2 percent to 103.7, the highest level since September 2008, from 102.4 the prior month that was more than initially estimated, figures from the New York-based private research group showed today. The measure rose 6.4 percent from November 2010.

The report is consistent with Labor Department data last week that showed payroll growth picked up while the unemployment rate dropped to 8.6 percent. At the same time, the lack of faster hiring is limiting wage gains and restraining consumers’ ability to boost their spending, which accounts for about 70 percent of the economy.

“The better than expected growth in economic activity in recent months is likely to lead to some acceleration in job growth in the beginning of 2012,” Gad Levanon, director of macroeconomic research at the Conference Board, said today in a statement.

The Employment Trends Index aggregates eight labor-market indicators to forecast short-term hiring trends. On average, the gauge can signal a rebound in hiring as little as three months before the fact and can predict job declines six to nine months in advance, the Conference Board said.

Component Improvements

Improvements in seven of the index’s eight components contributed to the increase in the overall gauge. These included a drop in the number of consumers saying jobs were hard to get, fewer first-time claims for unemployment benefits and a rising demand for temporary workers, the Conference Board said.

Payrolls grew by 120,000 workers last month after a gain of 100,000 in October, the Labor Department’s report showed on Dec. 2. The median forecast of economists surveyed by Bloomberg News called for an increase of 125,000. The jobless rate declined to 8.6 percent, the lowest level since March 2009, from 9 percent, in part due to the departure of Americans from the labor force.

November payrolls included a 50,000 gain in retail trade as companies hired for the holiday shopping season. The number of temporary workers rose 22,300.

Macy’s Inc., the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.

--Editors: Kevin Costelloe, Christopher Wellisz

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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