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Sales of New homes in U.S. Climb 1.5% to 417,000 Rate

*from www.bloomberg.com, April 23, 2013 (To view original article click here.)

Take Away #1: Sales of new homes advanced in March as near record-low mortgage rates helped the industry complete the strongest quarter since 2008, putting the economy on firmer footing.

Key Facts and Figures:

  • Commerce Dept. figures today showed purchases of single-family properties climbed 1.5% last month to a 417,000 annual pace.
  • The median estimate of 76 economists surveyed by Bloomberg called for March sales to rise to 416,000.
  • Shares of homebuilders such as Toll Brothers Inc. (TOL) rallied as cheaper borrowing costs and rising household information bolstered demand.

Take Away #2: The figures underscore the view of some Federal Reserve policy makers that residential real estate will contribute more to economic growth this year.

Key Facts and Figures:

  • Home sales averaged a 424,000 annual rate in the first three months of this year, the strongest since the third quarter of 2008.
  • Stocks climbed after the figures and as earnings from Travelers Cos. To Netflix beat estimates.
  • The S&P 500 Index rose 1.2% to 1,574.20 at 12:24 p.m. in New York.
  • The S&P 500 Supercomposite Homebuilding Index jumped as much as 6.3%, the biggest gain since July 26.

Take Away #3: Barclays Plc analysts raised their view on the industry today to positive from neutral.

Key Facts and Figures:

  • Barclays analysts raised their view, projecting a 10% jump in new-home prices this year amid a “fast and furious” recovery.
  • The median price of a new home climbed 3% last month from a year earlier to $247,000, today’s report showed.

Key Facts and Figures:

Take Away #4: Today’s housing figures showing strength in the U.S. economy, contrast weakness elsewhere.

Key Facts and Figures:

  • Euro-area services and factory output shrank for a 15th month in April as the currency bloc struggled to emerge from a recession.
  • The output decline adds more pressure on the European Central Bank to do more to boost growth.
  • China’s manufacturing is expanding at a slower pace this month on weakness in global and domestic demand, according to a Purchasing Managers’ index released by HBSC Holdings and Markit Economics.
  • The slower expansion in Chinese manufacturing is fueling concern that the world’s second-biggest economy is faltering.

Take Away #5: Purchases were 17.6% higher in March than the same period in 2012.

Key Facts and Figures:

  • Economists’ estimates for U.S. March new-home sales ranged from rates of 395,000 to 435,000.
  • February was previously reported at 411,000 annual rate.

Take Away #6: Sales increased in two of four regions from the prior month, with a 20.6% gain in the Northeast and a 19.4% advance in the South.

Key Facts and Figures:

  • Demand decreased 20.9% in the West and 12.1% in the Midwest.
  • Builders are responding to increased demand by making more homes available.
  • There were 153,000 new homes on the market at the end of March, the most since November of 2011.
  • At the current sales rate, the supply would last 4.4 months, the same as in February.

Take Away #7: Mortgage rates hovering near record lows and a healing job market may keep providing a spark for the industry.

Key Facts and Figures:

  • Housing starts climbed to a 1.04 million annual rate, the fastest since June 2008, the Commerce Dept. said last week.
  • However, higher costs for raw materials, limited developed land and tight credit conditions are hurdles.
  • The National Association of Home Builders/Wells Fargo Index of builder confidence fell this month to its lowest level since October.
  • Builders were still more optimistic about the future, with a gauge of their sales outlook for the next six months increasing to the highest level since 2007.
  • The average rate for a 30-year fixed mortgage fell to 3.41% in the week ended April 18, the third consecutive drop, according to Freddie Mac.
  • The rat slid to an all-time low of 3.31% in November.

Take Away #8: Figures yesterday from the National Association of Realtors showed previously owned homes sold at a 4.92 million rate in March, down from a 4.95 million pace the previous month.

Key Facts and Figures:

  • A lack of inventory of more affordable existing properties has driven up the cost of such homes, making newly-constructed units more attractive to potential buyers.
  • The NAR report showed the media price of an existing home rose 11.8%, the most since November 2005, to $184,000 last month from a year earlier.

Take Away #9: Sales of new homes are calculated when a contract is signed, making them a timelier barometer than purchases of previously owned dwellings.

Key Facts and Figures:

  • Sales of previously owned dwellings are tabulated when a deal closes.
  • Newly constructed homes accounted for about 7% of the residential market in 2012, down more than 15% before the 2007-2009 recession began.

Take Away #10: The strength in housing is spreading to other parts of the economy.

Key Facts and Figures:

  • “The majority of data still points to a robust and sustainable recovery,” Christopher Connor, CEO of Sherwin-Williams Co. said.
  • “Our sales results in the first quarter still support that conclusion,” said Connor.
  • Sales at Sherwin-Williams, the largest U.S. paint retailer, rose 1.4% in the first quarter form a year earlier to reach a record $2.17 billion.
  • After a long period of being a drag on the economy, the housing market is now providing lift to economic activity, said Federal Reserve Bank of New York President William C. Dudley.
  • “In 2013 it is likely to provide a boost to growth on the order of 0.5 percentage point,” said Dudley.

*To view original article from www.bloomberg.com click here.

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