Tags: Housing | Starts | building | permits

Housing Starts in U.S. Fell in February from Three-Year High

Tuesday, 20 Mar 2012 10:03 AM

Housing starts in the U.S. fell in February from a three-year high, showing the recovery in the residential real estate market will take time to develop.

Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, climbed to the highest level since October 2008.

The pace of construction was led by a jump in multifamily construction that indicates demand for rental housing is increasing as Americans remain concerned about the prospects for single-family dwellings. Distressed properties and more foreclosures continue to threaten the outlook for property values.

“We’re getting stabilization around these still rather weak levels,” Sean Incremona, a senior economist at 4Cast Inc. in New York, said before the report. “New home sales, they have an additional headwind: There’s plenty of existing homes already.”

The median estimate in a Bloomberg News survey called for a rise to 700,000. Estimates of the 80 economists surveyed by Bloomberg ranged from 650,000 to 775,000. The prior month was revised up to 706,000, the highest since October 2008, from a 699,000 pace.

Permits increased to a 717,000 annual pace, the most since October 2008, today’s report showed. They were projected to rise to a 686,000 annual rate, from 682,000 the prior month, according to the survey median.

Single-Family

Construction of single-family houses fell 9.9 percent to a 457,000 rate. Work on multifamily homes that include townhouses and apartment buildings last month advanced 21 percent to an annual rate of 241,000.

Optimism among homebuilders has been improving in recent months. The National Association of Home Builders/Wells Fargo index of builder confidence held in March at the highest level since June 2007 as sales expectations climbed for a sixth month, figures showed yesterday.

Building materials-maker Owens Corning Inc. is among companies also benefiting as housing stabilizes.

“We have the wind at our back as the economy recovers and housing improves,” Sheree Bargabos, president of roofing and asphalt at the Toledo, Ohio-based company, said on a March 9 conference call. “Growth is anticipated as the housing market recovers, driven by home affordability, improving home values and home remodeling activity.”

Mortgage Rates

The average rate on a 30-year fixed mortgage reached an all- time low of 3.87 percent in February, according to data from Freddie Mac.

A measure of housing affordability a month earlier climbed to 206.1, according to the National Association of Realtors. A value of 100 means a family earning the national median income can afford a median-priced property at current mortgage rates.

Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist and aimed at bringing down borrowing costs like mortgage rates.


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2012-03-20
Tuesday, 20 Mar 2012 10:03 AM
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