By Shobhana Chandra
Aug. 26 (Bloomberg) -- Sales of new houses and orders for long-lasting goods in the U.S. probably increased in July as the rebound from the worst recession since the 1930s broadened, economists said before reports today.
New-home purchases rose 1.6 percent to a 390,000 annual pace, the highest level in eight months, according to the median forecast of 71 economists surveyed by Bloomberg News. Bookings for durable goods may have jumped 3 percent, the most since the economic slump began in December 2007.
The gains indicate Federal Reserve efforts to thaw credit markets together with the Obama administration’s “cash-for- clunkers” program and tax credits for first-time homebuyers are boosting demand. Builders and factories, which have cut a combined 3.3 million jobs during the recession, may keep growing in coming months as sales improve and inventories drop.
“We have an economy that’s on the mend,” said Jennifer Lee, an economist at BMO Capital Markets in Toronto. “The stimulus is clearly having a good impact. Both housing and manufacturing are looking better.”
The Commerce Department’s report on new-home sales is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 365,000 to 420,000. Sales jumped 11 percent in June, the most in almost nine years, to reach an annual pace of 384,000.
The department’s figures on durable goods are due at 8:30 a.m. The projected increase would follow a 2.2 percent decrease in June.
Auto Production
General Motors Co. and Ford Motor Co. are among automakers that plan to expand output in the second half after the government’s cash incentive lifted sales. Minus transportation equipment, bookings for goods meant to last several years probably rose 0.9 percent for a third consecutive gain.
The Standard & Poor’s builder supercomposite index has gained 40 percent since the end of June as evidence mounted that the housing-market slump was easing.
Home sales are responding to policy efforts such as an $8,000 tax credit for first-time buyers, the Fed’s decision to keep interest rates near zero, and its purchases of mortgage- backed securities to free up funding for housing loans.
Fed Chairman Ben S. Bernanke, who led the biggest expansion of the central bank’s power in its 95-year history to stem the economic slide, was nominated to a second term yesterday by President Barack Obama. In a speech last week, Bernanke said “economic activity appears to be leveling out.”
‘Slow’ Recovery
“The prospects for a return to growth in the near term appear good,” Bernanke said on Aug. 21 in Jackson Hole, Wyoming. The recovery will be “relatively slow at first.”
Risks to a sustained rebound include a jobless rate that’s forecast to reach 10 percent by early 2010 and mounting foreclosures. By driving down prices, distressed properties compete with new houses, hurting construction.
Even so, the housing crisis is abating. The S&P/Case- Shiller national home-price index, released yesterday, rose 2.9 percent in the second quarter from the prior three months, the first increase since 2006 and the biggest in almost four years.
Existing home sales advanced in July to the highest level in almost two years, boosted by lower prices, buyer incentives and near-record-low borrowing costs, data from the National Association of Realtors showed last week.
While accounting for only about 7 percent of the housing market, new-home purchases are considered a timelier indicator because they are based on contract signings. Sales of previously owned homes, which make up the remainder, are compiled from closings and reflect contracts signed weeks or months earlier.
“We’re likely not to experience a lot of downside from here,” Pulte Homes Inc. Chief Executive Officer Richard Dugas said last week. Even so, it could remain a “tough environment for a while.”
Pulte this month completed its purchase of Centex Corp., the first large combination of publicly traded homebuilders since the housing recession began.
Bloomberg Survey
===============================================================
Durables Durables New Home New Home
Orders Ex-Trans Sales Sales
MOM% MOM% ,000’s MOM%
===============================================================
Date of Release 08/26 08/26 08/26 08/26
Observation Period July July July July
---------------------------------------------------------------
Median 3.0% 0.9% 390 1.6%
Average 3.0% 0.7% 391 1.8%
High Forecast 8.0% 2.0% 420 9.4%
Low Forecast 0.7% -0.9% 365 -5.0%
Number of Participants 72 42 71 71
Previous -2.2% 1.6% 384 11.0%
---------------------------------------------------------------
4CAST Ltd. 5.5% 2.0% 395 2.9%
Action Economics 3.5% -0.9% 395 2.9%
AIG Investments 1.0% 0.2% 380 -1.0%
Aletti Gestielle SGR 3.8% --- 400 4.2%
Ameriprise Financial Inc 3.5% 1.1% 390 1.6%
Argus Research Corp. 0.9% --- 385 0.3%
Banesto 2.8% --- 400 4.2%
Bank of Tokyo- Mitsubishi 0.8% --- 387 0.8%
Bantleon Bank AG 3.4% -0.2% 380 -1.0%
Barclays Capital 4.0% --- 385 0.3%
BBVA 2.2% 0.6% 410 6.8%
BMO Capital Markets 3.0% 1.0% 388 1.0%
BNP Paribas 3.0% --- 390 1.6%
Briefing.com 2.8% 0.4% 380 -1.0%
Calyon 3.0% 1.0% 395 2.9%
Capital Economics 4.2% 1.0% 400 4.2%
CIBC World Markets 4.5% 1.5% 388 1.0%
Citi 1.5% -0.5% 400 4.2%
ClearView Economics 2.5% --- 390 1.6%
Commerzbank AG 4.0% 1.0% 390 1.6%
Credit Suisse 4.0% 1.5% 400 4.2%
Daiwa Securities America 1.5% --- 400 4.2%
Danske Bank --- --- 375 -2.3%
DekaBank 3.3% --- 385 0.3%
Desjardins Group 2.5% --- 380 -1.0%
Deutsche Bank Securities 1.0% 0.5% 390 1.6%
Deutsche Postbank AG 3.5% 1.0% --- ---
DZ Bank 3.4% 1.0% 393 2.3%
Exane 3.0% 0.5% 390 1.6%
First Trust Advisors 8.0% 0.1% 389 1.3%
Fortis 3.0% --- 400 4.2%
FTN Financial 3.0% 1.5% 385 0.3%
Goldman, Sachs & Co. 4.0% --- 380 -1.0%
Helaba 3.0% --- 390 1.6%
Herrmann Forecasting 4.7% 1.0% 394 2.6%
HSBC Markets 2.4% 1.0% 420 9.4%
IDEAglobal 3.0% 1.2% 390 1.6%
IHS Global Insight 5.6% --- 410 6.8%
Informa Global Markets 3.0% --- 375 -2.3%
ING Financial Markets 3.8% 1.3% 400 4.2%
J.P. Morgan Chase 1.5% -0.5% 390 1.6%
Janney Montgomery Scott L 2.9% 0.8% 380 -1.0%
Landesbank Berlin 5.0% 0.1% 395 2.9%
Landesbank BW 2.8% --- 380 -1.0%
Merrill Lynch/BAS 1.8% 1.0% 365 -5.0%
MFC Global Investment Man 1.5% 0.5% 392 2.1%
Mizuho Securities 1.0% --- 373 -3.0%
Moody’s Economy.com 4.0% 0.5% 400 4.2%
Morgan Keegan & Co. 0.7% --- 392 2.1%
Morgan Stanley & Co. 3.7% --- 400 4.2%
National Bank Financial 3.0% 1.0% 400 4.2%
Newedge 2.2% 0.2% --- ---
Nomura Securities Intl. 4.4% 0.5% 388 1.0%
Nord/LB 1.5% 1.0% --- ---
PNC Bank 2.0% --- 395 2.9%
Raymond James 1.8% 0.9% 380 -1.0%
RBC Capital Markets 4.4% 0.4% 389 1.3%
RBS Securities Inc. 3.5% --- 375 -2.3%
Ried, Thunberg & Co. 3.0% --- 395 2.9%
Schneider Foreign Exchang 2.6% 1.4% 379 -1.3%
Scotia Capital 5.0% 1.0% 388 1.0%
Societe Generale 2.5% 0.0% 385 0.3%
Stone & McCarthy Research 4.4% --- 392 2.1%
TD Securities 2.0% 0.8% 390 1.6%
Thomson Reuters/IFR 3.9% 0.9% 395 2.9%
Tullett Prebon 3.0% --- 395 2.9%
UBS Securities LLC --- --- 395 2.9%
UniCredit Research 3.0% --- 390 1.6%
University of Maryland 1.0% --- 395 2.9%
Wells Fargo & Co. 1.9% 0.4% 400 4.2%
WestLB AG 3.0% --- 387 0.8%
Westpac Banking Co. 3.0% --- 396 3.0%
Woodley Park Research 1.0% --- 402 4.7%
Wrightson Associates 3.0% --- 395 2.9%
===============================================================
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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