Home sales in the US probably climbed last month to the highest level since May 2010, adding to evidence the housing market is regaining its footing, economists said reports this week will show.
Combined purchases of new and existing houses rose to an annual rate of 4.97 million from 4.92 million in December, according to the median forecast in a Bloomberg News survey. Claims for jobless benefits held near the lowest level since 2008, bolstering consumer confidence, other reports may show.
A strengthening job market, combined with record affordability driven by the drop in home prices and mortgage rates, will probably keep underpinning demand. However, the US Federal Reserve and administration of US President Barack Obama are striving to find ways to lend the industry additional assistance amid concern that mounting foreclosures will continue to hinder the recovery.
“Home sales have bottomed and from here on we should see a moderate pickup,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York. “Hiring is improving slowly, so that’s helping.” More policy efforts are needed as “we still can’t rely on housing to recover on its own,” she said.
The US National Association of Realtors will release data on -existing house sales on Wednesday. Purchases increased 0.9 percent to an annual rate of 4.65 million, following a pace of 4.61 million in December, according to the Bloomberg survey median.
Sales of new homes climbed to an annual rate of 315,000 from 307,000 the previous month, the survey median showed.
The report is scheduled to be released by the US Department of Commerce on Friday. Last year marked a record low for the industry in data going back to 1963, as builders sold 302,000 homes, down 6.2 percent from 2010.
Reports last week indicated that housing is on the mend. Builders broke ground on more homes than forecast last month, helped by warmer weather, and construction permits also advanced. The National Association of Home Builders/Wells Fargo index of builder confidence climbed this month to the highest level since May 2007.
Beazer Homes USA Inc reported that orders jumped 36 percent in the final three months of last year from a year earlier, and closings on new houses surged more than 60 percent. The Atlanta-based builder said it expected to sell more properties this year than last.
“While our visibility into the economic conditions for the remainder of the year is limited, I believe that we will benefit from a gradually improving housing market,” Beazer Homes chief executive officer Allan Merrill said on an earnings call on Feb. 2.
Investors also are upbeat about prospects. The Standard & Poor’s Supercomposite Homebuilding Index has advanced 21 percent since the end of last year, outpacing an 8.2 percent gain in the broader S&P 500.
Policymakers are working to help distressed homeowners. The top five mortgage lenders this month reached a US$25 billion settlement with 49 states and the US government over the use of faulty paperwork in foreclosures.
Federal Reserve Chairman Ben Bernanke said the central bank’s efforts to spur growth are being blunted by impediments to mortgage lending and called for more steps to heal the housing industry.
“The economic recovery has been disappointing in part because US housing markets remain out of balance,” Bernanke told homebuilders on Feb. 10 in Orlando, Florida. “We need to continue to develop and implement policies that will help the housing sector get back on its feet.”