WASHINGTON – Sales of previously owned U.S. homes probably rose in March for a third month to reach the highest level since late 2009, further evidence of an improving real-estate market, economists said before a report today.
Purchases climbed 0.4 percent last month to a 5 million annualized rate, according to the median forecast of 66 economists surveyed by Bloomberg before data from the National Association of Realtors in Washington. The last time sales exceeded a 5 million pace was November 2009, when first-time homebuyers rushed to take advantage of a temporary tax credit.
Historically low mortgage rates, rising property values and job growth are helping repair the housing market, giving the world’s largest economy a boost. At the same time, lean inventories of available properties may be limiting the pace of progress in the industry.
“Housing is a very bright spot in this recovery, and it’s one of the reasons why the recovery will stay on track,” said Eric Green, global head of rates and FX research at TD Securities Inc. in New York. “With people seeing broader healing in demand and gaining confidence because they don’t expect prices to fall anymore, they’re actually beginning to act.”
The Realtors’ sales data will be released at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from rates of 4.9 million to 5.2 million.
Existing-home purchases, counted when contracts close, are recovering from a 13-year low of 4.11 million in 2008. Annual sales peaked at 7.08 million in 2005. A total of 4.66 million previously-owned houses were sold in 2012.
Real-estate activity is being stoked by cheaper borrowing costs. The average rate for a 30-year fixed mortgage dropped to 3.41 percent in the week ended April 18, the third consecutive decline, according to Freddie Mac. The rate reached a record low of 3.31 percent in November.
Demand is also rising as the population grows and more people find work. At February’s sales pace of 4.98 million, it would take 4.7 months to sell all the available existing homes compared with 4.3 months in January, the lowest since 2005. This level of supply will typically yield price increases in the “low single-digit” range, according to NAR chief economist Lawrence Yun.
Higher home prices have also boosted household wealth. Property values rose 10.2 percent in the 12 months through February, the biggest gain in almost seven years, according to Irvine, California-based CoreLogic Inc.
Builders are responding by stepping up construction, providing a boost for the expansion. They broke ground on new homes in March at the fastest pace in almost five years, the Commerce Department said April 16.
Contacts in most districts of the Federal Reserve system said “residential and commercial real estate improved markedly” with rising property values and demand for home loans that was “steady to slightly up,” according to its Beige Book business survey, which covers the period from late February to early April.
The strength in housing is spilling over into other parts of the economy such as manufacturing.
“We’re encouraged by the sustained improvement in housing sales, new home construction, rising housing prices, reduced inventories, historically low mortgage rates, and the best housing affordability in years, all of which combined to create a positive environment for our company and our industry,” Paul Toms, CEO at Martinsville, Va.-based furniture maker Hooker Furniture Corp., said on an April 15 earnings call.
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