Ahead of the Bell: US Housing Starts
WASHINGTON (AP) — U.S. builders likely pulled back on home construction in November after starting work in October at the highest pace in more than four years.
Superstorm Sandy may have also slowed home building in the Northeast. Sandy hit the East Coast on Oct. 29.
But the pace last month is still likely to add to evidence of a sustained housing recovery.
Economists forecast that builders broke ground on houses and apartments at a seasonally adjusted annual rate of 870,000 in November. That would be down from October's annual pace of 894,000, the most since July 2008.
The Commerce Department will release the report at 8:30 a.m. EST Wednesday.
In October, the annual rate of construction of single-family homes dipped 0.2 percent to 594,000. But the pace of apartment construction, which fluctuates more from month to month, jumped 10 percent to 285,000.
Economists at JPMorgan Chase think new apartment construction fell in November after rising sharply for two months. But single-family home building will remain steady, they expect.
Also in October, applications for building permits, a sign of future construction, dipped 2.7 percent to 866,000. The drop suggests that housing starts declined in November. In September, permits reached a four-year high.
Housing starts are 87 percent above the annual rate of 478,000 in April 2009, the recession low. But they're still well short of the 1.5 million annual rate that is considered healthy.
Still, numerous signs suggest that the housing market is improving steadily. Builder confidence rose in December for a seventh straight month to the highest level in more than 6½ years, according to a survey released Tuesday by the National Association of Home Builders/Wells Fargo.
The index of builder sentiment rose two points to 47, the highest since 2006. Builders are more optimistic, in particular, about current sales and buyer traffic, the survey found.
Readings below 50 still signal negative sentiment about the housing market. But the index has been rising since October 2011, when it was 17.
More people are looking for a new house or apartment, encouraged by modest job gains, a gradually improving economy and mortgage rates near record-low levels. At the same time, fewer homes are available for sale. The low supply is helping lift prices.
Sales of previously occupied homes rose 2.1 percent in October. New-home sales fell slightly that month, slowed by steep declines in the Northeast from Superstorm Sandy. But they were still 17 percent higher that month than in the same month a year ago.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.