AP News

Ahead of the Bell: US housing starts


WASHINGTON (AP) — U.S. homebuilders likely began work at a slightly slower pace in January than in December, though housing starts are expected to stay near a 4½-year high and help strengthen the recovery of residential real estate.

Economists forecast that builders started construction at a seasonally adjusted annual rate of 920,000 last month, according to a survey by FactSet. The report will be issued at 8:30 a.m. EST Tuesday.

In December, builders started work at an annual rate of 954,000, the fastest in 4½ years. The pace of construction of both single-family homes and apartments increased. And the rate at which builders requested permits to start work also reached a 4½-year high.

The U.S. housing market is slowly regaining its health after stagnating for roughly five years after the housing boom collapsed. Steady job gains and near-record-low mortgage rates have encouraged more people to buy.

A steady rise in prices reflects, in part, fewer homes for sale. The supply of previously occupied homes for sale has reached its lowest level in more than a decade. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.

Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.

For all of 2012, builders started work on 780,000 homes. That was still only about half the annual number consistent with healthy markets. But it represents a 28 percent jump from 2011. And it was the most housing starts since 2008, when construction was still falling after the housing bubble burst more than six years ago.

Sales of new homes jumped nearly 20 percent last year to 367,000, the most since 2009. Still, many economists don't foresee a full housing recovery before 2015 at the earliest.

The National Association of Home Builders said Tuesday that confidence among U.S. homebuilders slipped in February from a 6½-year high in January. Many builders reported less traffic by prospective customers before the critical spring home-buying season begins.

The home builders' sentiment index dipped to 46 in February from 47 in January. It was the first monthly decline in the index since last April.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006, when it was 51. It began trending higher in October 2011, when it was 17.

Many builders are facing higher costs for building materials and having trouble obtaining financing for construction. Some also are facing a shortage of workers in markets where residential construction has picked up sharply, such as Texas and Arizona.

Though new homes represent only a fraction of the housing 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 statistics from the home builders.


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