Existing Home Sales Probably Decreased in April as Economy Staggered

[marmar]

from Bloomberg:



Existing Home Sales Probably Decreased: U.S. Economy Preview

By Shobhana Chandra

May 18 (Bloomberg) -- Sales of previously owned U.S. homes probably fell in April and a gauge of the economy's prospects was unchanged, reinforcing concern that growth will stagnate, economists said before reports this week.

Home resales declined 1.6 percent to a 4.85 million annual rate, according to the median estimate of economists surveyed by Bloomberg News before a May 23 report from the National Association of Realtors. No change in the index of leading economic indicators, due from the Conference Board tomorrow, would follow a 0.1 percent gain in March.

Prospective home buyers are waiting for prices to decline further, and defaults on subprime mortgages have caused lenders to tighten loan rules, choking off demand. The deepening housing slump, drop in consumer confidence and increase in firings indicate economic growth may stall.

``A recessionary environment will arise during this year, triggered by housing weakness,'' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. The drop in sales and rising glut of properties on the market are ``discouraging construction and depressing home prices.''

Repurchases account for 85 percent of the market, while new-home sales account for the rest. The Commerce Department's report on the latter is due next week.

Sales of new homes are viewed as a leading indicator because they are tabulated when a contract is signed. Existing- home sales reflect contract closings, which typically come a month or two later.

Previous Declines

Prior to March, the leading economic indicator index had fallen for five consecutive months. Growing pessimism among consumers and the slowdown in manufacturing held down the index last month.

The glut of unsold homes is likely to continue to weigh on prices most of the year, discouraging construction. Residential building has subtracted from economic growth since the first three months of 2006, culminating in a 25 percent decline last year that was the biggest since 1980.

Homebuilders continue to struggle. Atlanta-based Beazer Homes USA Inc. last week reported a loss for the second straight quarter and belatedly filed its two outstanding quarterly financial reports. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=alcmWlgXTrL4&refer=home