By Courtney Schlisserman
April 28 (Bloomberg) -- Home prices in 20 major U.S. metropolitan areas probably dropped in February at a slower pace, adding to evidence the market may be stabilizing, economists said before a private report today.
The S&P/Case-Shiller index decreased 18.7 percent from a year earlier after a record 19 percent decline in January, according to the median estimate of economists surveyed by Bloomberg News. Another report may show consumer confidence climbed in April for a second month.
Declining prices, Federal Reserve efforts to bring mortgage rates down, and government tax credits for first-time buyers may continue to support sales after an almost four-year slide. Still, mounting unemployment means purchases are unlikely to rebound quickly.
“Affordability is at a record high and you’re seeing first-time buyers come back into the market,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “That has the potential to put a floor under home sales.”
The S&P/Case-Shiller gauge is due at 9 a.m. New York time. Estimates in the Bloomberg News survey of 26 economists ranged from drops of 19.2 percent to 17 percent. A smaller decrease would be the first since the measure starting dropping in January 2007.
At 10 a.m., the New York-based Conference Board’s index of consumer confidence may rise to 29.9 in April from 26 in March, according to the median forecast. Estimates ranged from a high of 35 to a low of 26. The measure hit a record low of 25.3 in February.
For the home-price index, the figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.
Foreclosure Surge
Foreclosure-driven declines in prices have spurred home resales. Purchases in March stayed near a four-month average and prices rose from February, according to data from the National Association of Realtors. About half of the March existing-home sales were of distressed properties and first-time buyers accounted for about 51 percent, the group said last week.
A total of 803,489 properties received a default of auction notice or were seized in the first quarter of 2009, the highest since records began four years ago, according to RealtyTrac Inc., an Irvine, California-based seller of mortgage data.
Sales of new homes in March were higher than economists forecast, according to Commerce Department data released last week. They fell 0.6 percent to an annual pace of 356,000 after a revised 358,000 in February that was stronger than previously estimated. Inventories of new homes fell to a seven-year low.
First-Time Buyers
KB Home, the Los Angeles-based homebuilder that targets first-time buyers, is among those in the industry seeing an improvement. The company last month reported a narrower first- quarter loss as orders rose for the first time in three years.
Other reports indicate a let-up in the economy’s decline. The Fed said earlier this month that the U.S. contraction slowed across several of its biggest regions in March, with some industries “stabilizing at a low level.” Retail sales showed a “slight improvement” in some areas, and there was a “scattered pickup” in home buying, according to the central bank’s so-called beige book.
Fed officials will tomorrow announce their decision on the direction of the benchmark overnight lending rate between banks.
Mortgage Rates
Steps to lower borrowing costs and unclog lending have helped push mortgage rates down in recent months. The average rate on a 30-year fixed mortgage reached a record low of 4.78 percent in the week ended April 2, according to Freddie Mac.
The National Association of Realtors’s affordability index, which tracks mortgage rates, home prices and incomes, surged in February to the highest level in 20 years of data.
Still, the increase in foreclosures has had a negative spillover effect on some builders.
Lennar Corp., the fourth-biggest builder in the U.S., on March 31 reported a wider first-quarter loss and said orders fell 28 percent. The company also said orders tumbled in January and February.
“Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets,” Chief Executive Officer Stuart Miller said in a statement.
Bloomberg Survey
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Case Shil Case Shil Consumer Richmond
Monthly Monthly Conf Fed
YOY% Index Index Index
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Date of Release 04/28 04/28 04/28 04/28
Observation Period Feb. Feb. April April
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Median -18.7% 142.8 29.9 -17
Average -18.6% 143.2 29.8 -17
High Forecast -17.0% 144.1 35.0 -14
Low Forecast -19.2% 142.8 26.0 -20
Number of Participants 26 3 61 8
Previous -19.0% 146.4 26.0 -20
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4CAST Ltd. --- --- 29.0 ---
Action Economics --- 142.8 30.0 ---
AIG Investments -17.0% --- 26.0 -14
Aletti Gestielle SGR --- --- 29.0 ---
Ameriprise Financial Inc --- --- 28.0 -18
Argus Research Corp. --- --- 30.0 ---
Bank of Tokyo- Mitsubishi --- --- 28.3 ---
Bantleon Bank AG --- --- 30.5 ---
Barclays Capital -18.7% --- 29.5 ---
BBVA -17.5% --- 29.1 ---
BMO Capital Markets -18.8% --- 28.1 ---
BNP Paribas --- --- 29.0 ---
Calyon --- --- 29.0 ---
Citi --- --- 28.0 ---
Commerzbank AG -19.0% --- 28.0 ---
Credit Suisse --- --- 33.0 ---
Daiwa Securities America --- --- 28.0 ---
Danske Bank --- --- 30.0 ---
DekaBank --- --- 32.0 ---
Desjardins Group -18.5% --- 31.0 ---
Deutsche Bank Securities --- --- 29.0 ---
Deutsche Postbank AG --- --- 30.0 ---
DZ Bank -18.7% --- 30.0 ---
First Trust Advisors --- --- 29.5 ---
Fortis -18.1% --- 30.0 ---
Goldman, Sachs & Co. --- --- 30.0 ---
Helaba --- --- 28.0 ---
Herrmann Forecasting -18.1% 144.1 29.9 -20
High Frequency Economics -18.6% --- 29.0 ---
HSBC Markets -18.5% --- 31.0 ---
IDEAglobal -18.7% --- 29.0 ---
IHS Global Insight --- --- 35.0 ---
Informa Global Markets --- --- 28.5 ---
ING Financial Markets -19.1% --- 31.0 -18
Intesa-SanPaulo -18.5% --- 29.0 ---
J.P. Morgan Chase -18.6% --- 29.0 ---
Janney Montgomery Scott L -18.6% --- 30.0 ---
Landesbank Berlin --- --- 30.0 ---
Maria Fiorini Ramirez Inc --- --- 33.0 ---
Merrill Lynch -18.6% --- 28.0 ---
Mizuho Securities -19.0% --- 27.0 ---
Moody’s Economy.com --- --- 26.5 ---
Morgan Stanley & Co. --- --- 28.0 ---
National Bank Financial --- --- 30.0 ---
Natixis -18.9% --- 28.0 ---
Newedge --- --- 30.0 -15
Nomura Securities Intl. --- --- 28.0 ---
Raymond James --- --- 27.0 ---
RBS Securities Inc. --- --- 32.0 ---
Ried, Thunberg & Co. --- --- 35.0 ---
Schneider Foreign Exchang --- --- 33.0 ---
Scotia Capital -18.8% --- 30.0 ---
Societe Generale --- --- 31.0 ---
TD Securities -18.8% --- --- -15
UBS Securities LLC -18.5% --- 31.0 ---
Unicredit MIB -19.2% --- 30.0 ---
University of Maryland -18.9% --- 30.0 ---
Wachovia Corp. --- --- 32.0 ---
Wells Fargo & Co. --- 142.8 29.0 ---
WestLB AG -18.7% --- 28.5 ---
Westpac Banking Co. -19.0% --- 30.0 -15
Wrightson Associates --- --- 35.0 -20
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To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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