U.S. New-Home Sales Lower Than Forecast in October (Update1)

By Shobhana Chandra

Nov. 29 (Bloomberg) -- Fewer new homes than forecast were sold in the U.S. in October even as prices dropped by the most in almost four decades, deepening the real estate slump that threatens to stall economic growth.

A total of 728,000 new houses were purchased at annual rate, compared with a median forecast of 750,000 of economists surveyed by Bloomberg News. The figure was up from a revised 716,000 pace in September that was the lowest in almost 12 years, the Commerce Department reported today in Washington.

The collapse in subprime lending and turmoil in financial markets are projected to extend the housing recession well into 2008. Some economists now forecast the world's biggest economy will grow this quarter at less than a fifth the previous three months' pace, prompting the Federal Reserve to lower rates.

``There is no question there has been another big leg down in housing in recent months,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who forecast sales would drop to a 725,000 pace. ``Prices will continue to slip.''

The median price of a new home dropped 13 percent, the most since 1970, to $217,800 in October from a year earlier.

Economists had forecast new home sales would decline to a 750,000 annual pace from an originally reported 770,000 rate the prior month, according to the median of 71 estimates in a Bloomberg survey. Forecasts ranged from 705,000 to 785,000.

U.S. Treasury securities held earlier gains after the report. The benchmark 10-year note yielded 3.94 percent as of 10:06 a.m. in New York, down 9 basis points from yesterday.

Growth Revision

The economy grew at an annual rate of 4.9 percent, the most in four years, according to revised data today from the Commerce Department in Washington. The pace is a percentage point stronger than estimated last month and follows a 3.8 percent rate in the second quarter.

Figures on first-time jobless claims suggested the labor market was cooling as growth slows. The number of Americans filing applications for unemployment benefits rose to 352,000 last week, the most since February, the Labor Department reported. The total number of workers on benefit rolls shot up to a two-year high.

Kohn's Outlook

``The housing sector has continued to decline and to erode at a very, very rapid rate,'' Fed Vice Chairman Donald Kohn said yesterday in response to a question after a speech in New York. ``It would be nice to see some early signs that it was beginning to stabilize, and we haven't seen that yet.''

Investors and traders await a speech from Fed Chairman Ben S. Bernanke on the economic outlook at a 7:00 p.m. today in North Carolina. Kohn suggested yesterday he would be open to the possibility of lowering the target interest rate again. Central bankers next meet on Dec. 11.

Inventories decreased. The number of homes for sale fell 2.3 percent to a seasonally adjusted 516,000. The supply of homes at the current sales rate dropped to 8.5 months' worth from 9 months in September.

Sales of new homes were down 24 percent from the same time last year.

Purchases rose in three of four regions. They climbed 14 percent in the Midwest, 6.8 percent in the South and 1.8 percent in the Northeast. Sales dropped 16 percent in the West.

Previously Owned Homes

Sales of previously owned homes fell in October to the lowest level in at least eight years, while the supply of unsold homes rose to 10.8 months at the current sales pace, also the highest since record keeping began in 1999, the National Association of Realtors reported yesterday.

New-home purchases are considered a timelier indicator because they are based on contract signings, while existing home sales are calculated when a contract closes, usually a month or two later. New home sales account for about 15 percent of total home sales and those of existing homes account for the rest.

The worst U.S. housing slump in 16 years will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report this week by the U.S. Conference of Mayors. The 361 largest U.S. cities will experience a combined loss of $166 billion in economic growth, it said.

Banks are tightening lending rules, buyers are waiting for bargains and the number of foreclosed properties is rising. As a result, prospects are poor for a quick recovery, executives at homebuilders D.R. Horton Inc. and Beazer Homes USA Inc. said.

Next year ``is going to be worse than '07 for us and for the industry in general,'' D.R. Horton Chief Executive Officer Donald Tomnitz said at a conference in Las Vegas this week.

Residential construction, which has subtracted from economic growth every quarter since the first three months of 2006, will remain a drag, economists said.

Fed policy makers reduced their growth forecasts when they last met on Oct. 31. They projected the economy would grow between 1.8 percent and 2.5 percent in 2008, ``notably below'' their last forecast issued in July, according to meeting minutes released Nov. 20.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: November 29, 2007 10:20 EST

Iniciado por El_Presi

Por cierto, le dedico el post a ex-burbujista

New home sales lag, prices plunge
Prices are off from year-earlier level as sales pace falls well short of forecasts, sales figures for August and September are also reduced.

NEW YORK (CNNMoney.com) -- The pace of new home sales were much weaker than expected in October even as prices tumbled, according to the government's latest reading on the battered housing and home building markets.

The annual pace of sales of new homes came in at 728,000 for the month, the Census Bureau reported Thursday. While that's up from the 716,000 rate now in place for September, it's well below the original reading of 770,000 for that month. The new September figure represents an 11-year low, and the August reading was also revised lower to 717,000.

The October sales estimate also misses the forecasts of economists surveyed by Briefing.com, who had been had looking for a sales rate 750,000 in October.

One thing helping October sales was that the median price of a new home sold in the month plunged 13 percent from year-earlier levels to $217,800.

On Wednesday, a separate report by the National Association of Realtors reported the weakest sales of existing homes on record despite the largest drop in prices ever.

While existing homes make up a majority of sales, the new homes report is closely watched as a more leading indicator of market strength, since those sales are recorded when a sales contract is signed. Existing home sales figures are collected at the time the sales closes, typically a month or two after the sales contract is signed.

The weak housing market has hit home builders particularly hard.

Of the nation's largest home builders, only luxury home builder Toll Brothers (Charts, Fortune 500), No. 6 in terms of revenue, has yet to report a quarterly loss in the current downturn. Analysts are forecasting a loss for Toll's just completed period after preliminary results showed a sharp drop in the number of homes sold and an even steeper decline in prices.

The five builders larger than Toll all reported much larger-than-forecast losses in recent financial periods. Earlier this month Hovnanian Enterprises (Charts, Fortune 500), the nation's No. 7 builder by revenue, reported that the sales pace during October "significantly deteriorated" in most of its markets, and its preliminary results also showed a sharp rise in cancellations. D.R. Horton (Charts, Fortune 500), the No. 3 builder, reported a smaller than expected loss last week.

In October, credit rating agency Moody's downgraded the debt of No. 1 home builder Lennar (Charts, Fortune 500), No. 2 Centex (Charts, Fortune 500) and No. 4 Pulte Homes (Charts, Fortune 500) to junk bond status

Iniciado por El_Presi

Por cierto, le dedico el post a ex-burbujista

Iniciado por Marai

Lo peor de todo son las revisiones a la baja de Agosto y Septiembre que indican que hay muchas cancelaciones, lo que también implica que la cifra final de octubre será mucho peor que la primera estimación.

En cuanto a los precios, también cambian mucho tras las revisiones así que no hay que hacer mucho caso al dato.

Iniciado por El_Presi

Si no me equivocado en los cálculos, han habido un 7% de cancelaciones respecto a las ventas previstas en septiembre