Confidence seen in housing market
Sales of previously owned homes and construction of new houses probably accelerated in February, highlighting the strength in residential real estate that’s helping propel the U.S. expansion, economists said before reports due out this week.
Purchases of existing properties increased to a 5-million annual rate, the strongest since November 2009, and housing starts rose to a 915,000 pace, according to the median forecasts in a Bloomberg News survey. Other data may show an index of leading economic indicators advanced for a third-straight month.
Americans are gaining confidence in the housing market as home values stabilize, the outlook for employment brightens and mortgage rates hover near record lows. Federal Reserve officials meeting this week will probably adhere to their plan of record monetary policy stimulus that has reduced borrowing costs.
“Housing has definitely improved,” said Sean Incremona, senior economist at 4Cast in New York and the top forecaster for housing starts, according to data compiled by Bloomberg. “There’s progress and it looks to be sustainable.”
Limited inventories and resilient sales are benefiting builders including Bloomfield Hills-based PulteGroup and Lennar, showing housing will keep contributing to growth this year after emerging as an economic bright spot in 2012. Metro Detroit also has seen a steady rise in sales prices because of a tight inventory of move-in ready homes.
Builders began work on 779,900 homes last year, a 28.1% increase from 2011 and the most in four years.
The Commerce Department will issue its February housing starts data on Tuesday. The National Association of Realtors report on sales of previously owned homes is due Thursday.
Existing-home sales reached a peak of 7.25 million in September 2005 before falling to a low of 3.45 million in July 2010, after the subprime-lending collapse pushed the economy into its last recession.
Lean inventories and a pickup in homebuyers boosted builder sentiment. A report due Monday from the National Association of Home Builders and Wells Fargo is projected to show an increase in confidence in March.
The Standard & Poor’s Supercomposite Homebuilding Index has surged 59.4% in the last year, compared with an 11.3% gain in the broader S&P 500.
Rising home sales are pushing up prices and reducing mortgage defaults.
Foreclosure filings, including default notices, auctions and repossessions, were down 25% in February from a year earlier, according to a Thursday report from RealtyTrac.
At the same time, some areas are struggling. New York, New Jersey, Florida and Nevada are among 16 states that reported an increase in foreclosure starts in February, according to RealtyTrac.
To ensure housing, the labor market and the rest of the economy keep improving, Fed policy makers are unlikely to scale back their $85 billion in monthly asset purchases, known as quantitative easing, at the conclusion of the two-day meeting on Wednesday, according to Roberto Perli, a managing director at International Strategy & Investment Group in Washington and a former economist for the Fed’s division of monetary affairs.
Lorraine Woellert, freep.com, Via Bloomberg News