Combined sales of new and previously owned properties rose to 4.93 million at an annual rate, the strongest since May 2010, from 4.89 million in January, according to the median forecasts in a Bloomberg News survey. Home construction also improved as warmer weather bolstered prospects for the industry, another report may show.
Job and income gains, cheaper homes and the lowestmortgage rates on record have combined to push affordabilityto an all- time high. With fewer new dwellings on the market, residential construction may be poised to contribute more to economic growth this year.
“The evidence is very clear that housing is beginning to improve,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “I do not expect housing to be a drag on GDP this year. It started to be a modest positive contributor last year. Now that it’s actually contributing again, that’s a significant turn of events.”
The National Association of Realtors will release its existing-home sales data on March 21. Purchases increased 0.7 percent to a 21-month high 4.6 million at an annual rate, after a 4.57 million pace in January, according to the Bloomberg survey median.
Sales of new homes in February climbed to a 325,000 annual rate, the fastest since December 2010, from 321,000 the prior month, the survey median showed. The report is due from the Commerce Department on March 23. For all of 2011, builders sold 304,000 homes, down 5.9 percent from the previous year.
Signings, Closings
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. New properties made up almost 7 percent of the market last year.
The improvement in the labor market has contributed to the recent housing gains. Payrolls rose in February, capping the best six-month increase since 2006, while the jobless rate held at athree-year low, according to Labor Department figures.
Warmer weather may have may have sustained construction and encouraged more Americans to shop for new properties. The average temperature was 38.2 degrees Fahrenheit (3.4 Celsius) last month, 3.6 degrees warmer than the 20th century average and the 17th warmest February in 118 years.
Housing Starts
Builders in February broke ground on 700,000 homes at an annual pace, the most in three months, economists said ahead of March 20 figures from the Commerce Department. That same report may show the strongest pace of building permits, a sign of future construction, since March 2010.
The National Association of Home Builders/Wells Fargo index of builder confidence probably climbed in March to the highest level since May 2007, economists said before a report tomorrow. An advance would be the sixth straight, the best performance since 1995.
“All the economic signs seem to be positive in terms of consumer confidence, interest rates, unemployment levels,” Martin Connor, chief financial officer at Toll Brothers Inc., said March 5 at a investors’ conference in Orlando, Florida.
The average rate on a 30-year fixed mortgage reached an all-time low of 3.87 percent in February, according to data from Freddie Mac.
A measure of housing affordability a month earlier climbed to 206.1, according to the National Association of Realtors. A value of 100 means that a family with the national median income has enough to qualify for a median-priced property.
Builder Shares
Investors also are upbeat about prospects. The Standard & Poor’s SupercompositeHomebuilding Index (S15HOME) has advanced 29 percent since the end of last year, more than twice the 12 percent gain in the broader S&P 500.
Building materials-maker Owens Corning Inc. is among companies also benefiting as housing stabilizes.
“We have the wind at our back as the economy recovers and housing improves,” Sheree Bargabos, president of roofing and asphalt at the Toledo, Ohio-based company, said on a March 9 conference call. “Growth is anticipated as the housing market recovers, driven by home affordability, improving home values and home remodeling activity.”
Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist and aimed at bringing down borrowing costs likemortgage rates.
Bloomberg Survey
==============================================================
Release Period Prior Median
Indicator Date Value Forecast
==============================================================
NAHB Housing Index 3/19 March 29 30
Housing Starts ,000’s 3/20 Feb. 699 700
Building Permits ,000’s 3/20 Feb. 682 686
Exist Homes Mlns 3/21 Feb. 4.57 4.60
LEI MOM% 3/22 Feb. 0.4% 0.6%
New Home Sales ,000’s 3/23 Feb. 321 325
New Home Sales MOM% 3/23 Feb. -0.9% 1.3%
==============================================================
To contact the reporter on this story: Timothy R. Homan in Washington atthoman1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz in Washington atcwellisz@bloomberg.net
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