Home sales and orders for durable goods probably climbed in July, signaling the U.S. is starting to strengthen after a second-quarter slowdown, economists said before reports this week.
Combined purchases of new and existing houses increased to a 4.89 million annual rate from a 4.72 million pace in June, according to the median forecast in a Bloomberg survey. Bookings for long-lasting goods climbed the most this year, another report may show.
Buoyed by cheaper properties and record-low mortgage costs, demand for real estate is bolstering the industry that helped trigger the recession. Minutes of the Federal Reserve’s latest meeting, also due this week, will be a reminder that policy makers are monitoring economic data such as housing and business investment to determine whether more stimulus is needed.
“Things seem to be looking a bit better compared to the weak second quarter,” said Omair Sharif, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut. “All the data point to a sustained improvement in housing.”
The National Association of Realtors will release existing house sales on Wednesday. Purchases increased 3.3 percent to a 4.52 million annual rate, following a 4.37 million pace in June, according to the Bloomberg survey median.
Sales of new homes, due the next day from the Commerce Department, rebounded to a 365,000 annual rate in July from 350,000 the prior month, the survey median showed.
Newly constructed properties made up 6.7 percent of the residential market in 2011, down from a high of 15 percent during the boom of the past decade. Last year marked the worst year for the industry in records going back to 1963, as builders sold 306,000 new homes, down from 323,000 in 2010.
Reports last week adding to evidence housing is on the mend. Residential construction permits, a proxy for future work, jumped to a four-year high in July even as housing starts fell from the fastest pace in more than three years. The National Association of Home Builders/Wells Fargo index of builder confidence rose in August to the highest level since 2007.
PulteGroup Inc., the largest U.S. homebuilder by revenue, posted a better-than-estimated profit and a 32 percent jump in orders in the second quarter. AV Homes Inc., which develops properties in Florida and Arizona, said it closed on 41 percent more houses in the second quarter compared to a year earlier, and contracts signed, net of cancellations, more than doubled.
“The housing market continues to gain momentum,” Allen Anderson, chief executive officer of AV Homes, said on an Aug. 7 earnings conference call. “We are no longer battling the headwinds of the housing recession.”
The average rate on a 30-year fixed mortgage dropped to 3.49 percent in the week ended July 26, the lowest in records dating to 1971, according to McLean, Virginia-based Freddie Mac.
Companies in related industries also are benefiting. Home Depot Inc., the largest U.S. home-improvement retailer, reported second-quarter profit that topped analysts’ estimates and raised its forecast for earnings this year as customers spent more on remodeling projects.
Investors have become more upbeat about housing. The Standard & Poor’s Supercomposite Homebuilding Index has advanced 61 percent so far this year, outpacing a 13 percent gain in the broader S&P 500.
The Fed has said it will “closely monitor” economic data and financial developments, according to a statement after its July 31-Aug. 1 meeting, at which policy makers determined they “will provide additional accommodation as needed” to accelerate the expansion. Minutes of the gathering are to be released Wednesday.
In other data, a Commerce Department report on Friday may show durable goods orders rose 3 percent in July, the most since December, according to the Bloomberg survey median.
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