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BANGALORE (Reuters) — Home Depot Inc. reported a higher-than-expected quarterly profit on Tuesday as cost cuts partly offset weak sales, and the world’s biggest home-improvement chain raised its earnings forecast for the year.Net profit fell to 1.1 billion, or 66 cents a share, in the second quarter ended on Aug. 2 from 1.2 billion, or 71 cents a share, a year earlier.Excluding a charge for closing the company’s EXPO businesses and a tax benefit, profit at the Atlanta-based retailer was 64 cents a share, above the analysts’ average forecast of 59 cents, according to Reuters Estimates.Sales fell 9.1% to 19.1 billion.The U.S. housing slump and the recession have curtailed demand for big-ticket remodels that fueled growth at home-improvement chains in recent years.As sales have slumped, the companies have resorted to aggressive cost cuts to preserve margins.From freezing officers’ salaries to closing certain specialty outlets, from streamlining its supply chain to using less energy in its stores, Home Depot (HD, Fortune 500) has adopted an array of measures to save money. It has also managed inventory tightly.The company, which shed about 7,000 jobs from the closure of the Expo Design Center chain and other corporate cuts earlier this year, said operating expenses fell 7.5% in the latest quarter.The results came the day after rival Lowe’s Cos Inc. (LOW, Fortune 500) announced plans to rein in its North American expansion plans and gave a dismal outlook for the current quarter as consumers put off big renovations.For the full fiscal year, Home Depot said it expected earnings per share from continuing operations to be flat to up 7%, compared with its prior forecast of flat to a decline of 7%.0:00
/4:02Shiller on home price uptickExcluding special items, it expects earnings per share from continuing operations to fall by 15% to 20%. It had earlier seen a decline of 20% to 26%.Home Depot said it still expected sales to fall by about 9% this year.In June, Home Depot said economic indicators signaled the worst of the U.S. housing correction had passed. It also raised its fiscal-year profit forecast as it expected improved operational efficiencies to boost margins this year.From improving its distribution network to targeting more marketing campaigns to Hispanic communities, Home Depot has been stepping up efforts to win back market share from Lowe’s.Shares of Home Depot were up 1.5% at 26.50 in light premarket trading.

NEW YORK: The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday. The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor’s and economists Case-Shiller. It was the first increase in the monthly index since July 2006.On an annual basis, home prices in the 20 cities fell 17.1%, but it was the fourth straight month that the year-over-year decline lessened.”This could be an indication that home price declines are finally stabilizing,” said David Blitzer, chairman of the index committee S&P, in a prepared statement.

Source:CNN

NEW YORK: Sales of existing homes disappointed again in June, coming in at a seasonally adjusted annualized rate of 4.89 million, up just 3.6% compared with May, according to a monthly report from the National Association of Realtors.Home sales peaked in August 2005 at an annualized rate of more than 7.2 million, but sales have not surpassed the 5 million mark since last September, despite a large number of homes on the market, low mortgage rates, a tax credit for first-time homebuyers and low, low prices. The median price for a home sold during the month was just 181,800 — 15.4% lower than 12 months earlier. The sales figures were slightly higher than industry expectations. A panel of analyst forecasts compiled by Briefing.com had predicted that sales would come in at 4.84 million units. NAR chief economist Lawrence Yun expressed hope that the industry could build upon the modest gain. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions,” he said.

Source:CNN

NEW YORK: The housing bust has finally clobbered super-pricey Manhattan home prices.Reports released Thursday by four major New York brokers show that prices cratered during the three months that ended June 30.Prices fell between 13% and 19% compared with the same quarter last year. The brokers found median prices that ranged from 795,000 to 849,000. The decline shows a marked turn from the first quarter of 2009, when the year-over-year change in median home prices ranged from a loss of 2% to a gain of 6%. Another change in the recent period: More people are buying.The number of sales picked up by more than 28% in the second quarter, according to Prudential Douglas Elliman. Driving the increase were sales of studio apartments and one-bedrooms, both of which gained market share, according to Jonathan Miller, president of appraisal company, Miller Samuel, which compiles data for Prudential Douglas Elliman.”It’s value-based shopping,” said Pam Liebman, chief executive of the brokerage Corcoran Group. “People are coming back into the market, but nobody is going to overpay.”Of course, in Manhattan “value” means studio prices that go for a median of 400,000 and one-bedrooms that fetch 650,000.Long reboundDespite the bleak report, the ingredients for a recovery are already in place, according to Greg Heym, chief economist for both Halstead Property and Brown Harris Stevens. But it will be very slow coming.”There are still risks to the economy, both national and local,” Greg Heym said. “But job losses have slowed, consumer confidence is higher and the stock market returned more than 30% during the quarter.”Furthermore, the impact of the Wall Street meltdown on the New York economy has been less catastrophic than first predicted. The city has held up well, according to Heym, and now the financial system has started stabilizing. Heym also pointed out that the foreclosure plague, so damaging to many markets, has never been a major problem in Manhattan. Co-ops have, if anything, stricter financial requirements than the lenders, requiring buyers to show their assets and come up with 20% down. That has meant that few co-op owners are in trouble with their mortgages.And now, the national housing market may be improving with sales at steady, albeit, lower volumes and home price declines flattening out. Those are all positive signs for Manhattan. The housing market may may be at or near the bottom of the cycle, according to Heym.”But people shouldn’t think that a bottoming out means a quick rebound,” he said.The high-lowHow quick any recovery will be depends a lot on the availability of jumbo mortgages, those exceeding 729,750. The difficulty in obtaining such loans has hurt sales in Manhattan. It has caused the strength of the market to switch from the sales of big, expensive homes to sales of smaller, cheaper ones.”The entry level market did not fall as far as the high end,” Miller said. “The difference was a jumbo versus a conforming mortgage.”Conforming loans, the ones bought or backed by Fannie Mae and Freddie Mac, are still available at very favorable rates. But jumbos, which exceed the loan limits imposed by Fannie and Freddie, have not been.Manhattan buyers are heavily reliant on jumbo loans because many homes are priced at well over the conforming loan limit. And it ain’t easy getting such mortgages right now.”Most banks are requiring jumbo borrowers to put at least 30% to 40% down — some need 50%,” said Miller. “Someone buying, say, a 4 million home, even with perfect credit and a raise this year, might not have the 1.2 million to 2 million to put down.”But there are a couple of positive factors prompting many entry-level buyers to get into the market, according to Bill Staniford, CEO of PropertyShark.com, which compiled Corcoran’s statistics.One is the first time homebuyers tax credit, the federal tax refund program available to anyone who hasn’t owned a home during the past three years.”People say that’s making a difference,” said Staniford. “And if interest rates continue to climb, that will introduce some urgency.” Once the economy recovers, the prospects for the Manhattan housing market are good. The market could quickly tighten again. There’s little new building going on. As a matter of fact, not a single building permit was filed in all of February, according to Heym.Plus, glamorous Manhattan is still drawing residents from all over. The population of New York, unlike many other old U.S. cities, is still growing.”In a couple of years, there’ll be a housing shortage again,” said Heym.

Source:CNN

NEW YORK: Home sales continued their modest upward swing in May, according to a closely watched industry report that rose for the fourth straight month for the first time in nearly 5 years.The Pending Home Sales Index, reported Wednesday by the National Association of Realtors (NAR), rose 0.1% during the month. The index was up 6.7% compared with May 2008. It was the first four-month runup in the pending sales measure since October 2004 Industry prognosticators had forecast no growth at all in the index for the month, according to Briefing.com, expecting it to settle back after ramping up 6.7% in April.But the rise in sales contracts may not yield a like increase in completed sales, according to Lawrence Yun, chief economist for NAR.”Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. Many industry insiders have complained that home appraisals are being too often based on values of foreclosed properties, which sell for significantly less than the homes of ordinary sellers.The banks that have repossessed the foreclosed homes are anxious to sell and accept offers at large discounts than comparable homes not in foreclosure.”We see that distressed homes often are selling for 20% less than normal homes in the same area, but some appraisals don’t distinguish between traditional homes and distressed property,” said NAR President Charles McMillan, a broker in Dallas-Fort Worth. Overall, home sales are still slow, about a third below the peak years of 2005 and 2006, despite huge drops in home prices.NAR’s Housing Affordability Index remains near historic highs, although it declined in May to 171.6 from 178.8 a month earlier. That was the high point for the index, which dates back to 1970. “Under these conditions the typical family would devote only 14.6% of gross income to mortgage principal and interest, which is one of the lowest percentages on record,” said Yun.

Source:CNN

NEW YORK: Home prices continued to tumble in April, falling 18.1% from a year earlier — but the month-over-month change in a closely watched real estate gauge narrowed sharply, indicating that housing markets may be starting to turn.The 20-city slice of the S&P/Case-Shiller Home Price index recorded a drop of 0.6% from March to April, compared with a 2.2% drop in the prior month. The index has declined every month since July 2006. The 10-city index fell 0.7%. “The pace of decline in residential real estate slowed in April,” says David Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Thirteen of the 20 metro areas also saw improvement in their annual return compared to that of March.”Not only that but every metro area save one — Charlotte, N.C. — reported improvement in their monthly return compared with March.”While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions,” said Blitzer. “We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”Blitzer pointed to some factors that may be lifting the housing markets. For one thing, the stock market bottomed out in March and started a strong recovery. The S&P 500 has gainedabout 37% since then. Consumer confidence has also improved, making house hunters more likely to pull the trigger on deals.Phoenix, where homes have lost 35.3% of their value over the past 12 months, was the worst performing market over that period. Las Vegas prices plunged 32.2% and San Francisco dropped 28%. Denver prices fell the least over the last 12 months, down 4.9%, followed by Dallas at 5% and Boston at 7.7%. Prices in Dallas rose 1.7% between March and April, the largest increase among the 20 cities. Las Vegas prices dropped 3.5%, the biggest decline — which was still narrower than the month before.Dallas also has suffered the smallest decline from the top of its market, off just 9.6% from its peak in June 2007. The rest of the cities have all suffered double-digit percentage drops from their peaks, with the worst being Phoenix, down 54.1% from June 2006.

Source:CNN

NEW YORK (CNNMoney,com) — Sales of newly constructed homes fell unexpectedly in May and were down almost a third from last-year’s levels, a government report said Wednesday.New home sales ticked down 0.6% last month to a seasonally-adjusted annual rate of 342,000, the Commerce Department reported. That was from a revised reading of 344,000 in April.Analysts expected the rate of new home sales to rise to 360,000, according to a consensus estimate of economists compiled by Briefing.com.New home sales were 32.8% below the same month a year ago, when the estimate stood at a 509,000 annual rate.Median and average prices: The median sales price of new homes rose to 221,600 in May, up more than 4% from a revised 212,600 in April — and up more than 3% from the median price of 229,300 in May 2008.The average sales price in May was 274,300, down more than 5% from a revised 260,800 in April. Supply: The seasonally-adjusted estimate of new houses for sale at the end of May was 292,000, a 10.2-month supply at the current sales rate.On Tuesday, the National Association of Realtors reported that existing home sales rose 2.4% in May, as prices fell nearly 17% from a year ago.

Source:CNN

NEW YORK: Existing home sales rose in May, as increasingly affordable home prices and a first-time tax credit attracted hesitant buyers.The National Association of Realtors reported that existing home sales ticked up 2.4% last month to a seasonally adjusted annual rate of 4.77 million million units compared to the downwardly-revised rate of 2.66 million in April. The sales came in below of expert forecasts of 4.82 million annual units, according to a consensus estimate of analysts compiled by Briefing.com, and are off 3.6% from the 4.95 million-unit pace 12 months ago.Low mortgage rates and affordable home prices helped draw in hesitant buyers, said Lawrence Yun, NAR chief economist, in a prepared statement. Yun said another likely boost was the 8,000 tax credit, which the Obama administration made available for qualified first-time home buyers.The median price of homes sold in May was just 173,000, a 16.8% year-over-year drop.The slight sales increase helped reduced some of the supply of homes on the market. Total housing inventory fell 3.5% to 3.8 million existing homes for sale. That’s a 9.6-month supply, down from a 10.1-month supply in April.But the increase “is less than expected because poor appraisals are stalling transactions,” Yun added. “Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”A report earlier this month showed the number of home sale contracts signed in April far exceeded forecasts. Pending home sales are a forward-looking indicator since many of the contracts take weeks or months to become completed deals.

Source:CNN

NEW YORK (Reuters) — Home Depot Inc said earnings could be flat this year, rather than falling as it previously forecast, saying the worst of the U.S. housing correction had passed.Shares of the world’s largest home improvement retailer, whose sales have suffered from the housing crisis and recession, rose 1.5% on Wednesday.Home Depot expects earnings per share from continuing operations to be flat to down 7% this year, compared with its previous forecast of a 7% decline.Based on a profit of 1.37 per share in the fiscal year that ended on Feb. 1, that means a forecast of 1.27 to 1.37, compared with the average Wall Street estimate of 1.33.Economic indicators are signaling that the worst of the housing downturn is over, Home Depot (HD, Fortune 500) Chief Executive Frank Blake said in a meeting with analysts.On an adjusted basis, the company expects earnings per share from continuing operations to fall by 20% to 26%, compared with its previous forecast of a 26% decline. That yields a forecast of 1.32 to 1.42 a share, compared with the analysts’ average estimate of 1.41 and last year’s profit of 1.78.Home Depot still expects sales to fall by about 9% this year, with sales at stores open at least a year down in a high-single-digit percentage range. It expects gross margins to be flat to slightly higher.The company said it should be able to achieve an operating margin of about 10% and a return on invested capital of about 15% over the long term, helped by improvements in customer service, products, productivity and efficiency, and a revival in the home improvement market.It did not provide a time frame for that long-term operating target.Home Depot has been upgrading service and products in its stores to win back market share from rival Lowe’s Cos Inc (LOW, Fortune 500).Earlier this year, Home Depot announced plans to freeze officers’ salaries and close certain specialty outlets to save money in the recession and prolonged U.S. housing slump.The Atlanta-based company, which shed about 7,000 jobs earlier this year, cut operating expenses 16.4% in the first quarter, which ended on May 3.Shares of Home Depot were up 1.5% at 24.72 in morning New York Stock Exchange trading, while Lowe’s rose 1.2% to 20.70.

NEW YORK: Home price declines have sent affordability soaring. Prices have fallen so far that the average U.S. home is now undervalued by 12.2%, according to an industry report released Wednesday.An analysis from IHS Global Insight, House Prices in America, reported that, of the 330 markets it tracked, homes are under-priced in 248. That contrasts sharply with four years ago when only 108 markets were undervalued.”The good news is that the declines are happening as consumer confidence is rising and housing sales and [building] starts seem to be bottoming out,” said Jeannine Cataldi, senior economist for IHS in a statement accompanying the study.”The bad news is that job losses continue at high rates, housing inventories are still elevated and consumers, while becoming somewhat more confident, are still wary in the face of economic uncertainty.”The analysis focused on three key factors of home affordability: income, housing densities and historical prices. From that data IHS arrived at statistically normal house values for a given area and then compared them with the actual prices. The difference between those two figures determines how much a place is under – or over- valued.The income statistics are the most important component in the formula, but historical prices capture intangibles that make people prefer certain cities. For example, glamorous places such as San Francisco or New York typically command higher prices than do old Rust Belt towns.Housing densities affect prices because, in areas with lots of developable land, builders can react to market conditions by acquiring plots cheaply and building new homes to meet increased demand.In high-density cities, land acquisition is much more expensive and painstaking. It takes time to put together new housing and there’s often a tight supply of homes for sale, which increases market prices.Prices still fallingThe IHS study reported price declines in 199 markets during the first quarter of 2009, when the national median fell at an annualized rate of 2.2%. During the previous three months, 312 metro areas registered declines.One-time bubble markets are now going through sales renaissances, according to Cataldi. “In Las Vegas and Phoenix, people are going in and snapping up foreclosures,” she said. “They often rent them back to the former owners.”The report claimed the most undervalued metro area in the nation is Vero Beach, Fla., where the median home price has fallen 29.7% since the first quarter of 2005 to 125,400. That is 42.5% below the expectation. Houma, La., prices, at a median of 113,500, are undervalued by 41.4%. Las Vegas prices have dropped more than 46% since 2005, and the city is now undervalued by 40.9%.On the other hand, homes in Atlantic City, N.J., cost a median of 243,600, an overvaluation of 44.1%, the most of any metro area. The Ocean City, N.J., median price of 302,100 is the second most overvalued, at 33.8%. In third place is Wenatchee, Wash., which at 247,100, is 29.3% above normal.In the biggest metro area, New York City, the price is just about right, with a median at 469,400, an under-valuation of just 3.3%. Los Angeles (357,100) is a bit further off, undervalued by 6.6% and Chicago (220,800) is down 13.2%.One may presume that the undervalued cities should return to their natural equilibrium and astute real estate investors and homebuyers could pounce on bargains and make a profit later. But Cataldi thinks that could take a long time. “Price declines are slowing but we’re still cautious,” she said. “We’re predicting stagnant prices through 2011.”Bottom fishingIn Florida, there are many condo developments with listings ripe for plucking, either in bunches or individually, according to Matt Martinez, who represents a private equity group that is investing hundreds of millions of dollars there. He reports that investors are able to make profits of 7% to 8% a year, after all expenses, by buying condos and then renting them at market rates.”Even higher [profits] exist on some highly distressed fractured condo deals where the lenders are selling the notes,” he said.In California, sales of deeply discounted distressed properties are flourishing, according to the California Association of Realtors. Inventory of homes priced under 500,000 has shrunk to a three-month supply at current rates of sale while the supply of million-dollar homes has expanded to 17 months.”The dramatic difference in inventory exemplifies how the low end of the market is attracting more first-time buyers and investors, creating a shortage of distressed properties for sale,” said James Liptak, president of CAR, in a statement accompanying the sales data.Even the battered Michigan market is attracting investors, according to the CEO of the Michigan Association of Realtors, Bill Martin.”It tends to be in the low-to-middle price range that is moving,” he said. “There has been investment buying, mostly concentrated in Detroit. People are buying up bundles of 100 to 200 homes.”The median single-family home in the Detroit metro area — where layoffs may threaten any recovery — sold for 77,700 during the first three months of 2009, according to the IHS report, but many repossessed homes in the city itself are packaged and sold as bundles and can be had for under 10,000 apiece.These markets may be in the forefront of a market recovery but, according to the IHS report, it’s too early to call a bottom. “More observations through the spring will be needed to support this trend,” it said.

Source:CNN