Oct. 19 (Bloomberg) -- Builders began work on more U.S.
homes than forecast in September on rising demand for apartments
and condominiums as more Americans become renters.
Housing starts climbed 15 percent to 658,000 houses at an
annual rate, the most since April 2010, Commerce Department
figures showed today in Washington. The median forecast in a
Bloomberg News survey called for a 590,000 pace. Beginning
construction of multifamily dwellings surged to the highest since
October 2008.
Building permits, a proxy for future construction, declined
to a five-month low, indicating foreclosures that are adding to
the supply of unsold homes and depressing property values may
continue to hold back developers. Housing's limited rebound is
among reasons Federal Reserve policy makers last month announced
more unconventional measures to boost demand and spur job growth.
'Even with modest job growth, we're seeing increasing
household formation, and that's really boosting demand for
apartments,' said Ryan Sweet, a senior economist at Moody's
Analytics Inc. in West Chester, Pennsylvania. 'What's worrisome
is the slide in permits. It's kind of a mixed bag.'
Housing starts estimates ranged from 560,000 to 643,000 in
the Bloomberg survey of 75 economists. August's pace was revised
to 572,000 from a previous estimate of 571,000. Home construction
totaled 554,000 units in 2009, the fewest since record-keeping
began in 1959.
Stock-Index Futures
Stock-index futures trimmed losses after the figures. The
contract on the Standard & Poor's 500 Index expiring in December
dropped 0.1 percent to 1,221.8 at 8:58 a.m. in New York, after
losing as much as 0.7 percent earlier.
The cost of living in September rose at the slowest pace in
three months, a Labor Department report showed. The consumer
price index climbed 0.3 percent. Core prices, which exclude
volatile food and fuel costs, rose 0.1 percent, less than
forecast and the smallest gain since March.
The Commerce Department's report also showed building
permits dropped 5 percent to a 594,000 annual rate in September.
New construction of single-family houses increased 1.7
percent to a 425,000 rate in September from the prior month. Work
on multifamily homes, such as townhouses and apartments, surged
51.3 percent to an annual rate of 233,000.
Total starts climbed in all four regions, led by an 18.1
percent rise in the West and a 15.7 percent increase in the
South.
Lower Rates
Lower borrowing costs may be supporting demand even as the
overhang of distressed properties weighs on prices. The average
rate for a 30-year fixed loan dropped to 3.94 percent in the
first week of October, the lowest in records dating back to 1971,
according to Freddie Mac.
Foreclosure filings in the U.S. declined 34 percent in the
third quarter from a year earlier as states continued to probe
allegations of foreclosure 'robo-signings' and lenders
scrutinized paperwork, according to RealtyTrac Inc. data released
last week. At the same time, default notices rose 14 percent from
the second quarter, a sign lenders may be speeding up the
repossession process, RealtyTrac said.
Scottsdale, Arizona-based Meritage Homes Corp., which builds
energy-efficient single-family homes, saw its sales in the
quarter ended in September rise from a year earlier even as
demand remains at 'depressed levels,' executive vice president
Brent Anderson said on an Oct. 12 conference call.
'We Need' Jobs
'We need to have more people in jobs, good, well-paying,
full-time jobs,' Anderson said. 'It's really a matter of
confidence.'
Homebuilders in the U.S. were less pessimistic in October as
gauges of prospective buyer traffic, sales and purchase
expectations rose. The National Association of Home
Builders/Wells Fargo sentiment index unexpectedly increased to
18, the highest level since May 2010, figures showed yesterday.
Readings less than 50 mean more respondents said conditions were
poor.
Fed Chairman Ben S. Bernanke said Oct 4 that the central
bank was ready to take further steps to boost an economy that he
said was 'close to faltering.' Speaking before Congress's Joint
Economic Committee, Bernanke said home construction was not
aiding the expansion, unlike in prior recoveries.
He said 'the overhang of distressed and foreclosed
properties, tight credit conditions for builders and potential
homebuyers, and the large number of 'underwater' mortgages' have
hurt home construction.
To contact the editor responsible for this story:
Christopher Wellisz at cwellisz@bloomberg.net
