Builders Probably Began Work on Fewer U.S. Houses in September
Builders Probably Start Work on Fewer Houses September
Jim R. Bounds/Bloomberg
Housing starts fell 3 percent to a 580,000 annual rate, according to the median estimate of 71 economists surveyed by Bloomberg News.
Housing starts fell 3 percent to a 580,000 annual rate, according to the median estimate of 71 economists surveyed by Bloomberg News. Photographer: Jim R. Bounds/Bloomberg
Oct. 18 (Bloomberg) -- David Crowe, chief economist for the National Association of Home Builders, talks with Bloomberg's Lisa Murphy about the outlook for the U.S housing market Confidence among U.S. homebuilders rose in October to the highest level in four months, a sign residential construction is stabilizing at depressed levels. (Source: Bloomberg)
Builders in the U.S. probably began work on fewer homes in September, a sign the residential real estate market will be slow to recover from the worst recession since the 1930s, economists said before a report today.
Housing starts fell 3 percent to a 580,000 annual rate, according to the median estimate of 71 economists surveyed by Bloomberg News. Building permits, a proxy of future production, were little changed, the survey showed.
Mounting foreclosures, near record-low home sales and a lack of jobs will make it difficult for housing, the industry that precipitated the economic slump, to rebound. Broadening foreclosure moratoria caused by faulty documentation at some of the nation’s biggest banks also raises the risk the mending process will be delayed even more.
“Builders are faced with weak new-home sales, competition from foreclosures and, if anything, uncertainty around the foreclosure environment has increased,” said Michelle Meyer, a senior U.S. economist at BofA Merrill Lynch Global Research in New York. The housing outlook is “deteriorating,” she said.
The Commerce Department’s report is due at 8:30 a.m. in Washington. Survey estimates ranged from 550,000 to 624,000. Starts plunged to a record-low 477,000 pace in April 2009 after reaching a three-decade high of 2.27 million in January 2006.
Housing permits rose to a 575,000 annual pace from 571,000 in August, according to the survey median. Permits fell to a record low of 522,000 in March 2009, rising to a 685,000 pace a year later, one month before the April expiration of a homebuyer tax credit worth as much as $8,000. The incentive pulled sales into late 2009 and early 2010.
Credit’s Effect
Purchases have also see-sawed following the credit. After reaching a 19-month high 414,000 annual rate in April, sales of new houses plunged to a record low 282,000 pace in May.
With foreclosures reaching a record in September, U.S. regulators last week said they were investigating whether employees of lenders including Ally Financial Inc., JPMorgan Chase & Co. and Bank of America Corp. had falsified documents used in the proceedings. Ally Financial and JPMorgan are among banks that have suspended some foreclosures or evictions to review paperwork, which may further delay a recovery in housing.
The Obama administration is concerned that halting foreclosures would hold up home sales, threatening the recovery in the housing market, White House Press Secretary Robert Gibbs said last week.
Obama Approval
With the approaching Nov. 2 congressional elections, Americans continue to have a dimmer view of Congress and President Barack Obama’s handling of the economy. Obama’s job approval in the week ended Oct. 17 was 45 percent, compared with an average 57 percent last year, according to a poll from Princeton, New Jersey-based Gallup.
Housing’s inability to rebound is one reason the economic recovery hasn’t strengthened. Ben S. Bernanke is among policy makers that have said the too-slow recovery has kept the jobless rate too high and inflation too low. The chairman of the Federal Reserve last week said additional monetary stimulus may be needed to spur growth.
Speculation that the central bank may pursue large-scale asset purchases has pushed down yields on U.S. Treasury securities, driving mortgage rates to record lows.
Concern over the outlook for housing, even as borrowing costs plunge, has caused builder shares to underperform the broader market. The Standard & Poor’s 500 Index has gained 13 percent since the end of August, outpacing a 5.4 percent gain in the S&P Supercomposite Homebuilding index.
Less Pessimistic
Builders this month were less pessimistic. The National Association of Home Builders/Wells Fargo’s confidence index released yesterday rose in October to the highest level in four months. Nonetheless, the reading of 16 was well short of the 50 level that signals the outlook is equally balanced between optimists and pessimists.
KB Home, the Los Angeles-based homebuilder that focuses on first-time buyers, last month reported a smaller third-quarter loss as revenue increased for the first time in almost four years. KB has been cutting costs amid the slump in sales and is seeking to lure buyers with houses that are smaller and less expensive than older designs.
Lennar Corp. is among homebuilders finding other ways to boost earnings as sales languish. The Miami-based company, the third-biggest U.S. homebuilder by revenue, reported better-than- estimated earnings on Sept. 20, boosted by improved margins and revenue from its distressed-investing unit.
Bloomberg Survey
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Housing Housing Building Building
Starts Starts Permits Permits
,000’s MOM% ,000’s MOM%
==============================================================
Date of Release 10/19 10/19 10/19 10/19
Observation Period Sept. Sept. Sept. Sept.
--------------------------------------------------------------
Median 580 -3.0% 575 0.7%
Average 580 -3.0% 573 0.4%
High Forecast 624 4.4% 596 4.4%
Low Forecast 550 -8.0% 550 -3.7%
Number of Participants 71 71 53 53
Previous 598 10.5% 571 2.1%
--------------------------------------------------------------
4CAST Ltd. 570 -4.7% 565 -1.1%
ABN Amro Inc. 604 1.0% ---
Action Economics 580 -3.0% 575 0.7%
Ameriprise Financial Inc 580 -3.0% 575 0.7%
Banesto 580 -3.0% 580 1.6%
Bank of Tokyo- Mitsubishi 593 -0.8% 565 -1.1%
Barclays Capital 590 -1.3% 583 2.1%
BBVA 610 2.0% 590 3.3%
BMO Capital Markets 576 -3.7% 571 0.0%
BNP Paribas 590 -1.3% ---
BofA Merrill Lynch Research 570 -4.7% 560 -1.9%
Briefing.com 550 -8.0% 550 -3.7%
Capital Economics 610 2.0% ---
CIBC World Markets 577 -3.5% 570 -0.2%
Citi 575 -3.9% 580 1.6%
ClearView Economics 590 -1.3% 580 1.6%
Commerzbank AG 560 -6.4% 570 -0.2%
Credit Agricole CIB 580 -3.0% 573 0.4%
Credit Suisse 570 -4.7% 550 -3.7%
Daiwa Securities America 590 -1.3% ---
DekaBank 575 -3.9% 570 -0.2%
Desjardins Group 575 -3.9% 580 1.6%
Deutsche Bank Securities 605 1.2% 590 3.3%
Deutsche Postbank AG 590 -1.3% ---
DZ Bank 580 -3.0% 570 -0.2%
First Trust Advisors 590 -1.3% ---
FTN Financial 580 -3.0% 565 -1.1%
Goldman, Sachs & Co. 568 -5.0% ---
Helaba 560 -6.4% 570 -0.2%
High Frequency Economics 560 -6.4% 570 -0.2%
Hugh Johnson Advisors 615 2.8% ---
IDEAglobal 590 -1.3% 580 1.6%
IHS Global Insight 565 -5.5% 588 3.0%
Informa Global Markets 555 -7.2% 560 -1.9%
Intesa-SanPaulo 580 -3.0% 575 0.7%
J.P. Morgan Chase 573 -4.2% 577 1.1%
Janney Montgomery Scott 595 -0.5% 590 3.3%
Jefferies & Co. 570 -4.7% 580 1.6%
Landesbank Berlin 550 -8.0% 590 3.3%
Landesbank BW 575 -3.9% 580 1.6%
Maria Fiorini Ramirez 560 -6.4% ---
MF Global 550 -8.0% 570 -0.2%
MFC Global Investment 595 -0.5% 570 -0.2%
Moody’s Analytics 575 -3.9% 580 1.6%
Morgan Keegan & Co. 608 1.7% 575 0.7%
Morgan Stanley & Co. 570 -4.7% ---
National Bank Financial 580 -3.0% ---
Natixis 580 -3.0% ---
Nomura Securities Intl. 585 -2.2% 580 1.6%
Nord/LB 580 -3.0% 570 -0.2%
Pierpont Securities LLC 590 -1.3% ---
PineBridge Investments 607 1.5% ---
PNC Bank 585 -2.2% ---
Raymond James 585 -2.2% 580 1.6%
RBC Capital Markets 565 -5.5% 560 -1.9%
RBS Securities Inc. 600 0.3% ---
Scotia Capital 570 -4.7% 560 -1.9%
Societe Generale 560 -6.4% 560 -1.9%
State Street Global Markets 605 1.2% 596 4.4%
Stone & McCarthy Research 586 -2.0% 577 1.1%
TD Securities 580 -3.0% ---
Thomson Reuters/IFR 560 -6.4% 560 -1.9%
UBS 580 -3.0% 580 1.6%
UniCredit Research 580 -3.0% 575 0.7%
Union Investment 600 0.3% 570 -0.2%
University of Maryland 570 -4.7% 580 1.6%
Wells Fargo & Co. 550 -8.0% ---
WestLB AG 589 -1.5% 574 0.5%
Westpac Banking Co. 568 -5.0% 554 -3.0%
Woodley Park Research 624 4.4% 564 -1.2%
Wrightson ICAP 550 -8.0% 575 0.7%
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To contact the reporter on this story: Bob Willis in Washington at Bobwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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