Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute, discussing new home sales on Bloomberg Television’s “InsideTrack,” says purchases of new U.S. homes probably stagnated in June, indicating housing is still languishing two years into the economic recovery.
Sales ran at a 320,000 annual pace last month after a 319,000 rate the prior month, economists surveyed by Bloomberg News forecast. Home prices declined from a year earlier and consumer confidence fell in July to a nine-month low, other data show.
Builders have little incentive to start projects as the prospect of more distressed properties entering the foreclosure pipeline depresses home values. The figures underscore Federal Reserve Chairman Ben S. Bernanke’s comments that demand for homes has been held back by slow job growth and restrained consumer optimism.
“Sales will remain weak, not only this year but well into next year,” Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, said before the report. “The outlook for housing is rather bleak.”
The median estimate in a Bloomberg survey was based on a poll of 71 economists. Forecasts ranged from 300,000 to 342,000. Sales last year totaled 323,000, the fewest since record-keeping began.
The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent in May from a year earlier, the biggest 12- month drop since November 2009, according to the median projection in a Bloomberg survey. Compared with a month earlier, home prices may be little changed.
Competition from cheaper previously owned homes is hurting sales of new dwellings. Distressed properties, which include foreclosures and short-sales, have made up about 33 percent of all existing-home sales since late 2008, according to the National Association of Realtors.
Limited job growth and unemployment above 9 percent for three straight months are keeping housing depressed even with mortgage rates close to record lows and lower prices. The National Association of Realtors index of housing affordability is close to a record high.
The Conference Board’s consumer confidence index fell to 56 in July from 58.5 the prior month, according to the median projection before the New York group’s 10 a.m. report.
National Association of Realtors figures on July 20 showed sales of previously owned homes dropped in June to a seven-month low. Existing-home inventories rose to 3.77 million, and it would take 9.5 months, the longest since November, to sell those properties at the current sales pace. Read More.