Ahead of the Bell: New Home Sales

Ahead of the Bell: New Home Sales

	Published : Tue, 26 Jun 2007 12:16 By : Agencies Print this Story

WASHINGTON (AP) - Economists expect data out Tuesday to show that May new home sales declined from a month earlier, pointing to continued weakness in the housing market.

The Commerce Department's monthly report is scheduled to be released at 10 a.m. EDT.

New home sales are expected to fall 6.2 percent to a seasonally adjusted annual rate of 920,000 units, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.

In April, sales of new single-family homes jumped by more than 16 percent to a seasonally adjusted annual rate of 981,000 units, the biggest increase in sales in 14 years, as builders slashed prices to sell a mounting supply of unsold homes.

Other parts of the housing market continue to slump. On Monday, the National Association of Realtors said sales of existing homes, which represent about 85 percent of the housing market, fell in May to the lowest level in four years, and the median home price dropped for a record 10th consecutive month.

The realtors' trade group is predicting that the median home price -- the midpoint where half the homes sold for more and half for less -- will decline by 1.3 percent this year while sales are forecast to drop by 4.6 percent. It would be the first annual price decline in four decades of record-keeping.

Analysts believe that home prices will continue falling until builders move further to cut back on production of new homes coming on the market.

The housing market's continuing slump is bad news for companies including D.R. Horton Inc., Lennar Corp., Pulte Homes Inc., Centex Corp. and Toll Brothers Inc., the largest U.S. homebuilders by market value. Last week, the National Association of Home Builders reported that an index of the housing market's health fell in June for the fourth straight month, to a 16-year low.

Another potential problem is mortgage rates, which have been rising in recent weeks, although they still remain below their historical averages. According to Freddie Mac, the average rate for 30-year mortgages was 6.26 percent in May, up from 6.18 percent in April.