Housing Starts in U.S. Probably Fell to Lowest in Four Months
March 15 (Bloomberg) -- Bernie Markstein, director of forecasting for the National Association of Home Builders, talks with Bloomberg's Lori Rothman about an NAHB report showing that confidence among U.S. homebuilders unexpectedly declined in March. The National Association of Home Builders/Wells Fargo index of builder confidence dropped to 15 this month from 17 in February, the Washington-based group said today. A reading below 50 means most respondents view conditions as poor.
March 16 (Bloomberg) -- Builders in February probably broke ground on the fewest U.S. homes since October, partly because of record snowfall in areas of the country, economists said before a government report today.
Housing starts fell 3.6 percent to an annual rate of 570,000 last month, according to the median forecast of 71 economists in a Bloomberg News survey. A separate report may show the cost of imported goods dropped 0.2 percent, signaling price pressures will be contained.
Mounting foreclosures are making it harder to clear inventories, keeping pressure on prices and discouraging new construction. The economy has yet to create the sustained job growth that could invigorate housing demand and is one reason Federal Reserve policy makers will keep interest rates near zero after their meeting today.
“There are still a lot of headwinds for builders,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “There’s enormous competition from distressed homes that’s weighing on demand for new housing. It’s going to be a very, very grudging recovery.”
The Commerce Department will report starts at 8:30 a.m. in Washington. Estimates in the survey ranged from 510,000 to 610,000, after a 591,000 pace in January.
At the same time, the Labor Department will release the import price gauge. Estimates ranged from a decline of 1 percent to a gain of 0.7 percent, following an increase of 1.4 percent in January, according to the Bloomberg survey median. Compared with a year earlier, the index probably rose.
Building Permits
The housing report may also show building permits, a sign of future construction, dropped for a second consecutive month, a sign the extension and expansion in November of a homebuyer tax credit is doing little to stoke demand. Permits fell 3.4 percent to a 601,000 annual pace, a three-month low, according to the survey.
A report yesterday showed builder confidence unexpectedly declined in March as prospective-buyer traffic fell to a one- year low. The National Association of Home Builders/Wells Fargo’s index of builder confidence dropped for the third time in four months.
The Standard & Poor’s supercomposite index of 12 builders, including D.R. Horton Inc. and Pulte Homes Inc., fell 0.9 percent yesterday. The broader S&P 500 rose less than 0.1 percent to 1,150.51.
Fed Meeting
Fed policy makers will leave the benchmark lending rate unchanged at zero to 0.25 percent, where it’s been since December 2008, according to the median forecast in a Bloomberg survey. They’re also likely to stick to their timetable of completing their plan to purchase $1.25 trillion in mortgage- backed securities at the end of this month that was part of an effort to drive down borrowing costs and revive the housing market.
President Barack Obama in November extended a tax credit of as much as $8,000 for first-time homebuyers, and expanded it to some current owners. The extension covers closings through June as long as contracts are signed by the end of April.
Bigger gains in housing sales ultimately require a pickup in job creation. Unemployment may end the year at 9.5 percent, according to a Bloomberg monthly survey.
Executives at Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, are among those watching if demand will hold up after the incentive fades. The Red Bank, New Jersey- based company this month reported its first quarterly profit since 2006.
“With the tax credit for first time and repeat buyers expiring at the end of the second quarter, we too are interested to see if the positive momentum that we established can be sustained,” Chief Executive Officer Ara Hovnanian said on a conference call with investors on March 3. “We’re keeping a close eye on this as we head into the summer months.”
Bloomberg Survey
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Import Housing Housing Building
Prices Starts Starts Permits
MOM% ,000’s MOM% ,000’s
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Date of Release 03/16 03/16 03/16 03/16
Observation Period Feb. Feb. Feb. Feb.
--------------------------------------------------------------
Median -0.2% 570 -3.6% 601
Average -0.2% 567 -4.0% 603
High Forecast 0.7% 610 3.2% 635
Low Forecast -1.0% 510 -13.7% 550
Number of Participants 49 71 71 47
Previous 1.4% 591 2.8% 622
--------------------------------------------------------------
4CAST Ltd. -0.6% 540 -8.6% 580
Action Economics 0.3% 591 0.0% 615
Aletti Gestielle SGR --- 570 -3.6% 630
Ameriprise Financial Inc -0.8% 570 -3.6% 610
Banesto 0.3% 580 -1.9% 610
Bank of Tokyo- Mitsubishi -1.0% 585 -1.0% 606
Barclays Capital -0.2% 565 -4.4% ---
BMO Capital Markets -0.2% 561 -5.1% ---
BNP Paribas -0.3% 555 -6.1% ---
BofA Merrill Lynch Research -0.1% 550 -6.9% 560
Briefing.com --- 610 3.2% 550
C I T I C Securities --- 580 -1.9% 610
CIBC World Markets --- 573 -3.1% 600
Citi 0.0% 580 -1.9% 620
ClearView Economics 0.4% 550 -6.9% 600
Commerzbank AG --- 570 -3.6% 600
Credit Agricole CIB --- 579 -2.0% 610
Credit Suisse --- 510 -13.7% ---
Daiwa Securities America --- 530 -10.3% ---
Danske Bank --- 561 -5.1% 590
DekaBank -0.7% 550 -6.9% 610
Desjardins Group -0.4% 565 -4.4% 600
Deutsche Bank Securities 0.3% 532 -10.0% 591
Deutsche Postbank AG 0.1% 570 -3.6% ---
DZ Bank -0.2% 580 -1.9% 620
Exane --- 570 -3.6% ---
First Trust Advisors -0.3% 557 -5.8% ---
Fortis -1.0% 590 -0.2% ---
Goldman, Sachs & Co. --- 547 -7.5% ---
Helaba --- 560 -5.3% 600
HSBC Markets 0.1% 550 -6.9% 600
IDEAglobal 0.3% 580 -1.9% 610
IHS Global Insight --- 546 -7.6% 610
Informa Global Markets 0.5% 580 -1.9% 600
ING Financial Markets -0.1% 570 -3.6% 630
Insight Economics -0.8% 575 -2.7% ---
Intesa-SanPaulo -0.4% 550 -6.9% 590
J.P. Morgan Chase 0.1% 560 -5.3% 600
Janney Montgomery Scott -0.3% 555 -6.1% 600
Jefferies & Co. -0.3% 550 -6.9% ---
Johnson Illington Advisors 0.7% 600 1.5% ---
Landesbank Berlin -0.8% 560 -5.3% 575
Landesbank BW --- 570 -3.6% 610
Maria Fiorini Ramirez Inc -0.2% 570 -3.6% ---
MF Global -0.3% 580 -1.9% 600
Moody’s Economy.com -0.4% 560 -5.3% 575
Morgan Keegan & Co. 0.2% 590 -0.2% 614
National Bank Financial --- 570 -3.6% ---
Natixis -0.2% 580 -1.9% ---
Nomura Securities Intl. 0.2% 560 -5.3% 635
PineBridge Investments 0.0% 562 -5.0% ---
PNC Bank --- 570 -3.6% ---
Raiffeisen Zentralbank 0.2% --- ---
Raymond James --- 580 -1.9% 610
RBC Capital Markets -0.9% 585 -1.0% ---
RBS Securities Inc. --- 575 -2.7% ---
Ried, Thunberg & Co. -0.2% 580 -1.9% ---
Schneider Foreign Exchange -0.4% 565 -4.4% 601
Scotia Capital --- 560 -5.3% 600
Societe Generale --- 570 -3.6% ---
Standard Chartered --- 550 -6.9% 600
Stone & McCarthy Research -0.3% 555 -6.1% 635
TD Securities 0.3% 580 -1.9% 600
Thomson Reuters/IFR 0.0% 575 -2.7% 605
Tullett Prebon -0.4% 575 -2.7% ---
UniCredit Research --- 560 -5.3% 590
Union Investment --- 590 -0.2% 620
University of Maryland 0.1% 580 -1.9% 610
Wells Fargo & Co. 0.1% 580 -1.9% ---
Westpac Banking Co. -0.3% 544 -8.0% 604
Woodley Park Research 0.4% 585 -1.0% 579
Wrightson Associates -0.2% 580 -1.9% 610
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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