Nascent re­bound in United States home sales as worst over

The Pak Banker - - Company& -

NEW YORK: The worst is over for the U.S. hous­ing mar­ket and a re­bound will gain mo­men­tum in 2012, ac­cord­ing to Dou­glas Year­ley, chief ex­ec­u­tive of­fi­cer of Toll Broth­ers Inc.

"The re­cov­ery is here to stay," Year­ley, whose com­pany is the largest U.S. lux­ury-home builder, said in an in­ter­view yes­ter­day at Bloomberg's head­quar­ters of­fice in New York. "I think 2011 will be an im­prov­ing year, but I think 2012 will be a big year for us."

The real es­tate in­dus­try, the trig­ger of the worst re­ces­sion since the 1930s, is strug­gling to main­tain a sus­tained re­cov­ery as fore­clo­sures mount and the nation's un­em­ploy­ment rate sticks close to 10 per­cent. The hous­ing mar­ket will avoid a dou­ble-dip af­ter reach­ing a bot­tom last year, Year­ley, 50, said.

Pend­ing sales of U.S. homes un­ex­pect­edly rose 10 per­cent in Oc­to­ber from a month ear­lier, the Na­tional As­so­ci­a­tion of Real­tors re­ported Dec. 2. Toll Broth­ers, based in Hor­sham, Penn­syl­va­nia, is see­ing more "qual­ity" vis­i­tors at its sales of­fices, a sign that buy­ers are less skit­tish about the mar­ket and more se­ri­ous about mak­ing pur­chases, Year­ley said.

"The num­ber of vis­i­tors isn't up," he said. "But the qual­ity of that vis­i­tor-the ques­tions they're ask­ing, their level of in­ter­est in a new home-is."

Toll Broth­ers last week re­ported its sec­ond straight quar­terly profit af­ter three years of losses as it recorded a ben­e­fit from a tax-law change and de­creased write­downs on land. For the fis­cal year ended Oct. 31, the com­pany had a loss of $3.37 mil­lion and rev­enue of $1.49 bil­lion, down 76 per­cent from 2006 peak sales of $6.12 bil­lion.

Toll Broth­ers shares fell 21 cents, or 1.1 per­cent, to $18.79 as of 4:15 p.m. in New York Stock Ex­change com­pos­ite trad­ing to­day. They are lit­tle changed this year, com­pared with a 3.8 per­cent de­cline in the Stan­dard & Poor's Su­per­com­pos­ite Home­build­ing In­dex of 12 com­pa­nies.

U.S. home prices will de­cline as much as 11 per­cent as weak de­mand and ris­ing in­ven­tory ex­tend the hous­ing slump into 2012, ac­cord­ing to a re­port to­day by Mor­gan Stan­ley.

"We see the trough oc­cur­ring in 2012 in­stead of our pre­vi­ous call of 2011," Mor­gan Stan­ley an­a­lyst Oliver Chang said in a tele­phone in­ter­view from San Fran­cisco. Val­ues will be lit­tle changed for three to four years af­ter 2012, gain­ing or los­ing about 2 per­cent with­out fac­tor­ing in in­fla­tion, he said.

Al­most six in 10 U.S. adults say a hous­ing re­cov­ery is at least two years away, ac­cord­ing to a sur­vey re­leased yes­ter­day by Tru­lia Inc. and Real­tyTrac Inc. More than a third of re­spon­dents said the re­bound won't hap­pen un­til 2014 or later.

Home prices, as mea­sured by the S&P Case-Shiller In­dex of val­ues in 20 cities, are down 29 per­cent from their 2006 peak. Un­em­ploy­ment is the biggest bar­rier to re­bound­ing sales, ac­cord­ing to Year­ley. The U.S. job­less rate climbed to a seven-month high of 9.8 per­cent last month, the La­bor Depart­ment re­ported Dec. 3.

Pres­i­dent Barack Obama has also slowed the eco­nomic re­cov­ery by be­ing too crit­i­cal of busi­ness, Year­ley said.

"The guy needs to cheer­lead," he said. "He needs to get the coun­try feel­ing good about the coun­try and get the coun­try to work. There's this malaise that hangs over it."

The Obama ad­min­is­tra­tion's home­buyer tax credit pulled sales for­ward rather than cre­at­ing new de­mand, Year­ley said. Home sales were boosted by the ben­e­fit ear­lier this year be­fore slid­ing af­ter the April 30 dead­line for con­tract sign­ings.

Pur­chases of new homes dropped 8.1 per­cent in Oc­to­ber to a 283,000 an­nual rate, the Com­merce Depart­ment re­ported Nov. 24. Sales reached a 275,000 pace in Au­gust, the low­est since data col­lec­tion be­gan in 1963. -Bloomberg

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