Washington, Feb. 27 (Bloomberg) -- Americans probably bought new homes at close to a record pace again in January, buoyed by the lowest mortgage rates since the 1960s, economists said in advance of today's report. A 1.05 million-unit annual rate of home sales was likely for the month, a decline of 3 percent from December's record 1.082 million, according to the median forecast of 55 economists in a Bloomberg News survey. Thirty-year fixed mortgage rates below 6 percent are convincing many Americans to purchase homes. Many homebuilders expect borrowing costs to stay low enough to make 2003 rival last year's record and underpin the economy. Sales of previously owned homes rose 3 percent last month to a record annual pace of 6.09 million, the National Association of Realtors said this week. ``There's nothing to indicate that housing demand ought to dramatically decline this year,'' said Bruce Karatz, chief executive officer of KB Homes, in an interview with Bloomberg Radio. A record 976,000 new homes were bought last year.
Demand may have ebbed in the Midwest after two strong months in the region, contributing to the slower national rate in January, said Tim Rogers, an economist at Briefing.com in Boston. The Commerce Department releases the new-home sales report at 10 a.m. Washington time. New homes account for 15 percent of all houses on the market and are among the most current indicators of demand because sales are based on contracts, when the buying decisions are made. Also today, new claims for unemployment benefits probably fell by 12,000 last week to 390,000 after rising the previous week to the highest in seven weeks, according to the median of economists' forecasts. Factory orders for durable goods probably rose 1 percent in January after two consecutive monthly declines, according to the median of forecasts. Both reports -- claims from the Labor Department and orders from the Commerce Department --are set for 8:30 a.m. Washington time.
Interest Rates
The average rate on a 30-year mortgage last week was 5.84 percent, which Freddie Mac, the No. 2 buyer of U.S. mortgages, said was the lowest in four decades. The rate averaged 5.92 percent in January, down from 6.05 percent in December. ``New-homes sales have really been on an incredible pace,'' economist Rogers said. With Federal Reserve policy makers expected to hold the overnight bank lending rate at a 41-year low for much of 2003, ``we're still in for a really booming housing sector, maybe even through the first half of this year.'' If the economy strengthened enough and central bankers began raising their target overnight bank rate, it would be months before housing starts to cool, according to industry officials.
``A 50 basis-point move in interest rates would still leave them at a very low level,'' said Stuart Miller, chief executive of builder Lennar Corp., in an interview with Bloomberg Radio on Tuesday. ``Our expectation is that even a 100 or 200 basis-point movement will have little effect on the pace of sales within the market.'' Lennar, the largest U.S. homebuilder, said last month that new home orders rose 39 percent to a record 6,531 in the three months ended Nov. 30 from 4,700 a year earlier. The value of homes in backlog, or awaiting completion, increased 61 percent to $3.2 billion. That suggests construction will stay strong. A majority of economists say that home sales will probably level off this year because so much of the demand for housing has already been satisfied. The National Association of Home Builders, which represents builders, home remodeling companies and other groups, is projecting sales of 942,000 in 2003, which would be the second- best year on record. //www.quote.bloomberg.com