NEW YORK - Sales of new U.S. single-family houses likely climbed in October, but forecasts varied widely on the impact of the first-time homebuyer tax credit, a Reuters survey found.
New home sales rose by about 2 percent last month to 410,000 units on a seasonally adjusted annual basis from 402,000 in September, the poll of 70 economists found.
Estimates spanned broadly between a drop to 370,000 and an increase to 430,000, however.
The Commerce Department will report the sales figures on Wednesday at 10 a.m. (1500 GMT).
Sales dropped by 3.6 percent in September, the first downturn after five straight monthly increases.
Sales had been stoked by the $8,000 first-time buyer tax credit that was set to expire on November 30. Borrowers would have had to close on loans by that date, slowing loan applications in the preceding weeks.
Early this month the Obama administration extended that deadline, with contract signings now required by April 30 and closings by June 30. It also added a $6,500 move-up buyer credit.
If sales of new homes did rise, even the most optimistic forecast calls for less of an increase than the record 10.1 percent rise seen for October in sales of existing homes.
A sampling of forecasts and analysis follows:
STONE & MCCARTHY RESEARCH ASSOCIATES:
FORECAST: 410,000 unit rate
The October numbers for sales of new single-family homes will likely improve further as homebuyers moved to take advantage of the tax credit before it expired at the end of November. However, the gains will probably not be as dramatic as those for sales of existing homes reported on Monday.
New home sales are likely to edge down by 3 percent to 390,000 in October, nearly matching the pace of decline in September. Since new home sales track signed contracts, October sales were likely depressed by the belief that the first-time homebuyer tax credit was to expire at the end of November, consistent with the notable downturn in demand for purchase mortgage applications in October. Since the tax credit has been extended, new home sales should pick back up at the turn of the year.
New home sales fell by about 4 percent in September to 402,000 units at an annualized rate, dropping for the first time since March. From March to August, new home sales jumped by nearly 26 percent as homebuyers took advantage of low mortgage rates, falling home prices and the federal first-time homebuyer tax credit.
We had expected new home sales to soften somewhat in the fall, as the impending expiration of the credit led to a fall in demand. Buyers had to close on a home by November 30 in order to claim the credit, and given that it takes several months to construct a new property, we anticipated that demand would slide as we got closer to November.
Although the tax credit was extended until April 30, 2010, the extension did not occur until early November, so the earlier dynamic likely remained in play, perhaps accounting for the weakening in September. Looking ahead, the extension of the tax credit could support new home sales at least through most of the first quarter, but further weakening prior to the extension seems likely in October.
Housing starts, which correlate well with sales because builders usually do not break ground on a new property until they have a commitment to buy, tumbled by nearly 11 percent in October.
New home sales are expected to bounce 4.5 percent to a 420,000 rate in October following the 3.6 percent drop in September that left sales at 402,000. Despite the unexpected pull-back in September, sales retained a net gain to the September level from an 0.329 million January cyclical trough. Moreover, inventories of new homes fell again, to 251,000 units in September from 261,000 in August, 270,000 in July and a cyclical peak of 572,000 in July of 2006.
(Reporting by Lynn Adler; Polling by Bangalore Polling Unit; Editing by James Dalgleish)