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Builders in U.S. Likely Started More Homes in January

Builders in the U.S. probably broke ground on more houses in January, indicating the residential real estate market is stabilizing, economists said before a report today.

Starts climbed 2.7 percent to a 675,000 annual rate, according to the median estimate of 79 economists surveyed by Bloomberg News. Building permits, a proxy for future construction, may have climbed 1.3 percent. Manufacturing in the Philadelphia area accelerated and higher fuel costs drove up a measure of wholesale prices, other data may show.

Beazer Homes USA Inc. (BZH) and D.R. Horton Inc. (DHI) are among builders reporting more orders as a pickup in employment, cheaper properties and borrowing costs close to a record low attract buyers. At the same time, the glut of foreclosed houses remains a restraint on construction, one reason the Obama administration and the Federal Reserve are taking steps to bolster the industry.

“We’re seeing some stabilization in housing, and demand will eventually pick up,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. “While it is still a beleaguered industry, the outlook is relatively favorable given the decent pace of employment we’ve had recently.”

The housing starts figures are due from the Commerce Department at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from 640,000 to 736,000.

Producer Prices

Also at 8:30 a.m., Labor Department data may show prices paid to factories, farms and other producers climbed 0.4 percent in January after decreasing 0.1 percent, according to the Bloomberg survey median. The so-called core producer price index, which excludes fuel and food, increased 0.2 percent after a 0.3 percent gain the prior month.

In a sign factories will remain at the forefront of the economic expansion, the Federal Reserve Bank of Philadelphia may report at 10 a.m. that its general economic index rose to a four-month high of 9 in February from 7.3 last month, according to the Bloomberg survey median. Readings greater than zero indicate expansion.

Residential real estate, in contrast, is still healing. Housing starts climbed to 606,900 last year from 587,000 in 2010 and reflecting gains in multifamily construction. They totaled 554,000 units in 2009, the lowest since record-keeping began in 1959. During the past decade’s housing boom, starts reached a peak of 2.07 million in 2005.

Today’s report may also show building permits climbed to a 680,000 annual rate in January from 671,000 the prior month, according to the Bloomberg survey median.

Warmer Weather

The fourth-warmest January on record probably gave homebuilding a boost, economists said. The National Oceanic and Atmospheric Administration reported the average temperature was 36.3 degrees Fahrenheit (2.39 Celsius), 5.5 degrees above the 1901-2000 long-term average.

Beazer Homes said orders jumped 36 percent in the final three months of 2011 from the same quarter a year earlier, and closings on new houses surged more than 60 percent. The Atlanta- based builder said it expects to sell more properties this year than last.

“While our visibility into the economic conditions for the remainder of the year is limited, I believe that we will benefit from a gradually improving housing market,” Allan Merrill, chief executive officer, said on an earnings call on Feb. 2.

D.R. Horton, the largest U.S. homebuilder by volume, reported net home orders rose to 3,794 in final three months of 2011, from 3,363 a year earlier.

‘More Positive’

“Simply put, our business feels more positive,” Donald Tomnitz, chief executive officer of the Fort Worth, Texas-based company, said in a Jan. 27 conference call.

The National Association of Home Builders/Wells Fargo index of builder confidence climbed in February to the highest level since May 2007, figures showed yesterday.

Investors also are upbeat about prospects for homebuilders while concerns about the European debt crisis weigh on the economy. The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) advanced 22 percent since the end of last year, outpacing a 6.8 percent gain in the broader S&P 500.

Builders still have to contend with a stream of distressed houses returning to the market. Fed Chairman Ben S. Bernanke said the central bank’s efforts to spur economic growth are being blunted by impediments to mortgage lending, and called for more steps to heal the housing industry.

“We have helped lower mortgage rates to the lowest point in many, many decades,” Bernanke told homebuilders on Feb. 10 in Orlando, Florida. “Yet we are not seeing as much activity as we would like to see.”

Also today at 8:30 a.m., Labor Department figures may show initial claims for jobless benefits rose for the first time in three weeks, to 365,000 in the period ended Feb. 11, according to the Bloomberg survey median.

                      Bloomberg Survey

================================================================
                               PPI     Core  Housing  Initial
                                        PPI   Starts   Claims
                              MOM%     MOM%   ,000’s   ,000’s
================================================================

Date of Release              02/16    02/16    02/16    02/16
Observation Period            Jan.     Jan.     Jan.   11-Feb
----------------------------------------------------------------
Median                        0.4%     0.2%      675      365
Average                       0.4%     0.2%      677      365
High Forecast                 0.8%     0.4%      736      380
Low Forecast                 -0.3%     0.0%      640      350
Number of Participants          75       72       79       43
Previous                     -0.1%     0.3%      657      358
----------------------------------------------------------------
4CAST Ltd.                    0.4%     0.1%      695      370
ABN Amro Inc.                 0.3%     0.2%      664      365
Action Economics              0.4%     0.1%      685      365
Aletti Gestielle              ---      ---       670     ---
Ameriprise Financial Inc      0.3%     0.1%      665      364
Analytical Synthesis          ---      ---       671     ---
Banca Aletti & C spa          0.3%     0.1%      660      370
Banesto                       ---      ---       670     ---
Bank of Tokyo- Mitsubishi     0.4%     0.2%      675     ---
Bantleon Bank AG              0.5%     ---       670     ---
Barclays Capital              0.4%     0.1%      666     ---
Bayerische Landesbank         0.3%     0.1%     ---      ---
BBVA                          0.3%     0.1%      675      360
BMO Capital Markets           0.3%     0.2%      683      365
BNP Paribas                   0.4%     0.2%      680      365
BofA Merrill Lynch Resear     0.4%     0.1%      675      365
Briefing.com                  0.3%     0.2%      645      365
Capital Economics             0.3%     0.2%      680     ---
CIBC World Markets            0.5%     0.2%      680     ---
Citi                          0.5%     0.3%      665      375
ClearView Economics           0.3%     0.1%      700     ---
Comerica Inc                  0.3%     0.1%      677     ---
Commerzbank AG                0.2%     0.2%      655     ---
Credit Suisse                 0.8%     0.4%      720      370
Daiwa Securities America      0.4%     0.1%      670     ---
Danske Bank                   0.4%     0.2%      676     ---
DekaBank                      ---      ---       710     ---
Desjardins Group              0.8%     0.3%      670      365
Deutsche Bank Securities      0.1%     0.2%      660     ---
Deutsche Postbank AG          0.3%     0.2%      670     ---
DZ Bank                       ---      ---       660     ---
Exane                         0.3%     0.1%      675     ---
Fact & Opinion Economics      0.5%     0.2%      655      355
First Trust Advisors          0.5%     0.1%      685      360
FTN Financial                 0.3%     0.2%      690     ---
Goldman, Sachs & Co.          0.2%     0.1%      703     ---
Helaba                        0.3%     0.1%      690      365
Herrmann Forecasting LLC      0.6%     0.2%      688      366
High Frequency Economics      0.6%     0.2%      700      380
HSBC Markets                  0.3%     0.2%      670      370
Hugh Johnson Advisors         0.3%     0.1%      650     ---
IDEAglobal                    0.2%     0.1%      665      365
IHS Global Insight            0.6%     0.2%      700     ---
Informa Global Markets        0.5%     0.3%     ---      ---
ING Financial Markets         0.2%     0.1%      679      350
Intesa Sanpaulo               0.5%     0.2%      680     ---
J.P. Morgan Chase             0.5%     0.3%      665      365
Janney Montgomery Scott L     0.5%     0.3%      684     ---
Jefferies & Co.               0.4%     0.2%      680     ---
Landesbank Berlin             0.5%     0.0%      650      370
Landesbank BW                 ---      ---       675     ---
Maria Fiorini Ramirez Inc     0.4%     0.2%      690      360
Market Securities             0.4%     0.2%      685     ---
MET Capital Advisors         -0.3%     ---       660     ---
Mizuho Securities             0.3%     0.1%     ---       365
Moody’s Analytics             0.4%     0.1%      678      365
Morgan Keegan & Co.           0.4%     0.1%      667     ---
National Bank Financial       ---      ---       670     ---
Natixis                       0.3%     0.1%      680     ---
Nomura Securities Intl.       0.7%     0.1%      640     ---
Nord/LB                       0.2%     0.1%      660      360
OSK Group/DMG                 ---      ---       650     ---
O’Sullivan                    0.8%     0.3%      695      370
Parthenon Group               0.1%     0.2%      736      364
Pierpont Securities LLC       0.6%     0.3%      690      363
PineBridge Investments        0.3%     0.2%      680      360
PNC Bank                      0.4%     0.2%      650     ---
Raiffeisenbank Internatio     0.3%     0.3%     ---      ---
Raymond James                 0.3%     0.1%      670      370
RBC Capital Markets           0.4%     0.1%      675      375
RBS Securities Inc.           0.5%     0.2%      690      375
Scotia Capital                0.2%     0.2%      650      365
Societe Generale              0.0%     0.2%      700      365
Standard Chartered            0.4%     0.2%      670      353
Stone & McCarthy Research     0.4%     0.1%      690      350
TD Securities                 0.4%     0.2%      700      360
UBS                           0.8%     0.3%      725      365
Union Investment              0.1%     ---       670     ---
University of Maryland        0.5%     0.2%      670      360
Wells Fargo & Co.             0.3%     0.2%      671     ---
WestLB AG                     0.4%     0.1%      660     ---
Westpac Banking Co.           0.3%     0.1%      670      365
Wrightson ICAP                0.3%     0.2%      685      365
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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