Sept. 24 (Bloomberg) -- New U.S. home sales may jump 30 percent next year, buoyed by low mortgage rates and a “greater than 50 percent probability” that Congress will extend a tax credit for first-time buyers, Goldman Sachs Group Inc. said.
New home sales in California will lead as property values rise and transactions climb to more than 525,000 nationally, analysts led by Joshua Pollard wrote in a note to investors. The firm raised its recommendation for D.R. Horton Inc., Meritage Homes Corp., Toll Brothers Inc. and M.D.C. Holdings Inc.
“Phrases like ‘the worst is well behind us’ and ‘things remain encouraging’ capture the mood of many constituents we met with on residential real estate,” Pollard said after visiting California. “The mood was much more negative on commercial real estate.”
The Mortgage Bankers Association’s index of applications to purchase or refinance a home rose 13 percent in the week ended Sept. 18. Sales of single-family new homes in July were on pace to be 433,000 this year after declining for three years, the Department of Commerce reported Aug. 26. Builders sold a record 1.28 million properties in 2005, the peak of the U.S. housing boom.
The Goldman Sachs forecast is based on the assumption Congress will extend or amend an $8,000 tax credit for first- time homebuyers that was instituted to rescue the housing market from free-fall. The credit is scheduled to expire Nov. 30.
No ‘Double-Dip’
“We give a greater than 50 percent probability of a federal tax credit extension which should allay fears of a ‘double dip’ in housing,” Pollard wrote.
Pollard added Scottsdale, Arizona-based Meritage to his “buy/attractive” list. He also rates Fort Worth-based D.R. Horton, Denver-based M.D.C. and Horsham, Pennsylvania-based Toll Brothers as “buy/attractive.
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