Washington: Purchases of previously owned US homes in Aug-ust probably held close to the weakest level this year and construction dropped to a three-month low as the industry showed few signs of emerging from its slump, economists said before reports this week.
Existing-home sales rose 1.7 per cent to a 4.75 million annual rate from an eight-month low in July, according to the median projection of 59 economists surveyed by Bloomberg News before a National Association of Realtors report on Wednesday. Housing starts dropped 2.3 per cent, economists forecast Commerce Department data is likely to show on Tuesday.
Limited employment, declining property values and mounting foreclosures remain hurdles for builders like Hovnanian Enterprises, thwarting a sustained rebound in residential real estate. Federal Reserve officials meet this week to discuss whether additional measures are needed to help revive the recovery and a languishing job market.
"The economy overall will take this crawl-stagger-crawl approach into 2012, which reflects all the issues the recovery is wrestling," Paul Ballew, chief economist at Nationwide Mutual Insurance in Columbus, Ohio, said. "Housing should hit a trough by the end of this year before going sideways at very suppressed levels."
Concerns the economy may be faltering, limited income gains and unemployment above 9 per cent have taken a toll on Americans' sentiment, dimming the prospects for a pickup in housing. The Conference Board's index of consumer confidence slumped in August to the lowest level since April 2009, and the Bloomberg Consumer Comfort Index has been stuck below minus 40 since the end of February, a level associated with recessions.
Payrolls were unchanged in August, the weakest reading in a year, according to Labour Department figures. Shifting views on the economic outlook and concerns about Europe's debt crisis led to historical financial market volatility in August.
"With all of the economic turmoil, both domestic and international, there's not much that points to an improving housing market at any point in the near future," Ara Hovnanian, chairman and chief executive officer of Hovnanian Enterprises, said in a September 8 call with analysts. "Our internal business plan assumes market conditions do not improve."
Homebuyer traffic and construction along the eastern seaboard may also have been hindered by Hurricane Irene, which caused losses of about $12.4 billion (Dh45.5 billion), according to an estimate by Kinetic Analysis, a Silver Spring, Maryland, firm that predicts the effects of disasters.