Sales of U.S. existing homes rose in April compared with the previous month, economists polled by Reuters forecast.
A poll of 66 economists by Reuters produced a median forecast of 4.66 million sales of existing homes on a seasonally-adjusted, annualized basis, in April. That would be up from 4.57 million sales in March.
Analysts noted that the pending sales index rose 3 percent in March, an encouraging sign for April sales.
Meanwhile, the number of existing homes for sale dropped slightly to 3.74 million in March.
Still, economists noted that foreclosures are still on the rise and that there is a large stock of shadow inventory, describing when would-be sellers put their houses back on the market when demand seems to be healthier.
The trend is flat, concluded Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The National Association of Realtors will release the monthly data at 10 a.m. EDT on Wednesday.
A sampling of forecasts and analysis on the upcoming consumer price data follows:
CARL RICCADONNA, DIRECTOR, SENIOR U.S. ECONOMIST, DEUTSCHE
BANK SECURITIES, NEW YORK:
Forecast: 4.65 million units
We look for a 1.8 percent increase in April over March sales. We have seen some evidence that the housing market is bottoming and that things are turning up just a bit. The pending home sales series has had some gains in recent months. While it's good news that things are turning up, I wouldn't look for a big rebound here. Sales are just bouncing along the bottom at this point.
MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES AMERICA, NEW YORK: Forecast: 4.7 million units
We're looking for a 2.8 percent increase in existing home sales. If you look at the recent pattern of home sales it seems as though they have formed a bottom. In addition to that, a low interest-rate environment has stirred the interest of some potential buyers. Also, Congress has sweetened tax incentives for first-time home buyers. So I look for at least steady, and possibly improved, home sales. There are negative factors to be sure, such as the weak labor market and continued declines in home prices. Both of those factors could have kept potential buyers sidelined.
Forecast: 4.70 million units
Since November, re-sales have fluctuated in a narrow range from 4.49 million to 4.74 million, hinting at stabilization in housing demand. With home prices down sharply versus year-ago levels and mortgage rates falling to around 5 percent, the NAR's homebuyer affordability index has soared by 36 percent since July 2008. Moreover, temporary tax credits for first-time buyers may also be luring potential purchasers into the market. Indeed, about half of all existing home sales in March were to first-time buyers.
In addition, the National Association of Realtors noted that 50 percent of re-sales in March were distressed properties (i.e., short sales or foreclosures), which bodes well for clearing some of the supply glut in the market.
However, balancing out these positive developments are two reasons for caution. First, with foreclosure activity accounting for half of all resales, and foreclosures typically selling for well below market value, prices continue to slip. There have been a few tentative signs of easing in the pace of home price declines in recent months, but for the most part, prices continue to drift lower.
Second, given the surge in job losses in recent months and with several banks declaring an end to foreclosure moratoriums in March, the potential for another sharp rise in the supply of distressed properties remains. For example, DQNews, a real-estate service, noted that lenders filed 135,431 mortgage default notices against California homeowners in the first three months of 2009, a record high and a 19 percent increase over the first quarter of 2008. Moreover, while the number of homes that lenders repossessed in the first quarter of this year (about 43,000) was down nearly 6 percent from the prior quarter, the decline was probably due to temporary foreclosure moratoriums. With a record number of default notices being sent out from January to March, this number is sure to rise in the coming months.
In any case, RBS expects that existing home sales may have rebounded in April, perhaps to around 4.70 million.