US housing sales last month probably rose to the highest level in more than three years, extending gains in residential real estate that are giving the US expansion a lift, economists said before reports this week.
Combined purchases of new and existing residences climbed to a 5.41 million annualized rate last month, the highest since November 2009, according to the median forecast of economists surveyed by Bloomberg ahead of figures from the National Association of Realtors and the US Department of Commerce.
Other data may show orders to manufacturers improved after slumping in March by the most in seven months.
Housing is a source of strength as borrowing costs near record lows and increasing employment help rebuild confidence, spur demand, stabilize prices and boost household wealth.
US Federal Reserve Chairman Ben Bernanke, who is to testify before the US Congress this week on the economic outlook, can point to the real estate rebound as evidence that policymakers’ efforts are gaining traction even as areas such as manufacturing cool.
“Housing is a very clear bright spot,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “It’s probably going to be a nice tailwind for us for the foreseeable future.”
The central bank is helping boost the housing market with US$40 billion a month in mortgage bond purchasing that is helping hold down mortgage rates.
Bernanke is set to testify before the Joint Economic Committee on Wednesday, and may provide clues as to whether he sees the Fed making enough progress toward its goal of substantial improvement in the labor market to warrant reducing stimulus.
Minutes of Fed policymakers’ two-day meeting that ended on May 1, in which officials said they were prepared to raise or lower bond purchases as dictated by economic conditions, will be out the same day.
The projected pace of total house sales last month would be the highest since a tax credit for first-time house buyers first expired in November 2009. It would be the third-highest since August 2007, four months before the start of the last recession.
Purchases of previously owned homes climbed to a 4.98 million annualized rate last month, also the highest since November 2009, according to economists’ projections.
The National Association of Realtors’ report is due on Wednesday.
Sales of newly built houses picked up to a 425,000 annualized rate, a three-month high, according to the median forecast in a Bloomberg survey of economists ahead of a report on Thursday from the US Department of Commerce.
“Housing has got the wind at its back,” said Jonathan Basile, a US economist at Credit Suisse Holdings USA in New York. “It makes you wonder how much longer does the Fed really have to keep the training wheels on the housing market.”