Purchases Of New Homes In U.S. Probably Rebounded In July

Purchases of new homes in the U.S. probably rose in July for the third time in four months, a sign the industry that helped trigger the recession is recovering, economists said before a report today.

Sales, tabulated when contracts are signed, climbed 4.3 percent to a 365,000 annual pace, according to the median estimate in a Bloomberg survey of 72 economists. Another report may show the number of claims for jobless benefits was little changed last week.

Buyers are returning to the market to take advantage of cheaper properties and record-low mortgage rates, helping to boost orders at builders like Toll Brothers Inc. Competition from foreclosures, unemployment exceeding 8 percent and limited credit pose hurdles to a more pronounced rebound, one reason Federal Reserve policy makers are monitoring housing data.

“The housing market has stabilized,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. “People believe the worst is over and it’s a good time to act. Builders will have to increase activity just to keep up with sales.”

Among other signs of improvement, residential construction permits, a proxy for future work, jumped to a four-year high in July. The National Association of Home Builders/Wells Fargo index of builder confidence rose in August to the highest level since 2007.

Fed officials assessed that “conditions in the housing sector appeared to have improved somewhat, but from a very low level,” according to minutes of the central bank’s July 31-Aug. 1 meeting released yesterday.

The Commerce Department will release the data today & Economists’ forecasts ranged from 340,000 to 400,000, following a decline in June to a 350,000 pace.