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.
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
