Homebuilding Probably Increased in U.S. to Three-Month High

Housing Starts in U.S. Fell in February
A contractor levels pea gravel in the basement of a home being built by Blume Construction in East Peoria, Illinois, U.S. Photographer: Daniel Acker/Bloomberg

Homebuilding in the U.S. probably climbed to a three-month high in February, another sign the residential real-estate market is stabilizing, economists said before a report today.

Housing starts increased to a 700,000 annual rate last month from a 699,000 pace in January, according to the median estimate of 80 economists surveyed by Bloomberg News. It would be the strongest reading since November’s three-year high of 702,000. The same report may show that building permits, a proxy for future construction, climbed.

Falling home prices and mortgage rates close to all-time lows are helping drive record housing affordability, benefiting builders like Toll Brothers Inc. Nonetheless, the real estate market faces headwinds from distressed properties and more foreclosures that could push values down further.

“We have seen some improvement from extremely low levels,” said Sean Incremona, a senior economist at 4Cast Inc. in New York. “There seems to some mild progress there.”

The housing starts figures are due from the Commerce Department at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from 650,000 to 775,000.

Today’s report may also show building permits climbed by 0.6 percent to a 686,000 annual rate, the fastest pace since March 2010, according to the survey median.

Milder-than-normal weather may have also played a role in propelling construction last month. The average temperature was 38.2 degrees Fahrenheit (3.4 Celsius), 3.6 degrees warmer than the 20th century average and the 17th warmest February in 118 years.

Sentiment Improving

Optimism among homebuilders has been improving in recent months. The National Association of Home Builders/Wells Fargo index of builder confidence held in March at the highest level since June 2007 as sales expectations climbed for a sixth month, figures showed yesterday.

“All the economic signs seem to be positive in terms of consumer confidence, interest rates, unemployment levels,” Martin Connor, chief financial officer at Toll Brothers, said March 5 at an investors’ conference in Orlando, Florida.

The average rate on a 30-year fixed mortgage reached an all-time low of 3.87 percent in February, according to data from Freddie Mac.

A measure of housing affordability a month earlier climbed to 206.1, according to the National Association of Realtors. A value of 100 means a family earning the national median income can afford a median-priced property at current mortgage rates.

Investors also are upbeat about prospects. The Standard & Poor’s Supercomposite Homebuilding Index has advanced 28 percent since the end of last year, more than twice the 12 percent gain in the broader S&P 500.

Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist and aimed at bringing down borrowing costs like mortgage rates.

Bloomberg Survey

================================================================ Housing Housing Building Building Starts Starts Permits Permits ,000’s MOM% ,000’s MOM% ================================================================ Date of Release 03/20 03/20 03/20 03/20 Observation Period Feb. Feb. Feb. Feb. ---------------------------------------------------------------- Median 700 0.1% 686 0.6% Average 701 0.3% 690 1.2% High Forecast 775 10.9% 735 7.8% Low Forecast 650 -7.0% 665 -2.5% Number of Participants 80 80 55 55 Previous 699 1.5% 682 1.6% ---------------------------------------------------------------- 4CAST 705 0.9% 665 -2.5% ABN Amro 699 0.0% --- Action Economics 680 -2.7% 680 -0.3% Aletti Gestielle 700 0.1% 685 0.4% Ameriprise Financial 700 0.1% 690 1.2% Analytical Synthesis 689 -1.4% 695 1.9% Banca Aletti 692 -1.0% 677 -0.7% Banesto 700 0.1% 693 1.6% Barclays Capital 720 3.0% --- BBVA 697 -0.3% 678 -0.6% BMO Capital Markets 697 -0.3% 685 0.4% BNP Paribas 685 -2.0% --- BofA Merrill Lynch 710 1.6% 700 2.6% Briefing.com 715 2.3% 680 -0.3% Capital Economics 710 1.6% --- CIBC World Markets 685 -2.0% 700 2.6% Citi 690 -1.3% 685 0.4% Comerica 680 -2.7% --- Commerzbank AG 685 -2.0% 685 0.4% Credit Agricole CIB 692 -1.0% 685 0.4% Credit Suisse 710 1.6% 700 2.6% Daiwa Securities America 705 0.9% --- Danske Bank 699 0.0% 682 0.0% DekaBank 685 -2.0% 690 1.2% Desjardins Group 690 -1.3% 700 2.6% Deutsche Bank Securities 725 3.7% 695 1.9% Deutsche Postbank AG 700 0.1% --- Exane 690 -1.3% --- Fact & Opinion Economics 690 -1.3% --- First Trust Advisors 695 -0.6% --- FTN Financial 710 1.6% 700 2.6% Goldman, Sachs & Co. 734 5.0% --- Helaba 720 3.0% 680 -0.3% High Frequency Economics 700 0.1% 680 -0.3% HSBC Markets 710 1.6% 715 4.8% Hugh Johnson Advisors 700 0.1% --- IDEAglobal 690 -1.3% 685 0.4% IHS Global Insight 684 -2.2% 697 2.2% Informa Global Markets 685 -2.0% 680 -0.3% ING Financial Markets 695 -0.6% 675 -1.0% Insight Economics 700 0.1% --- Intesa Sanpaulo 685 -2.0% 685 0.4% J.P. Morgan Chase 685 -2.0% 690 1.2% Janney Montgomery Scott 726 3.9% 701 2.8% Jefferies & Co. 700 0.1% 685 0.4% Landesbank Berlin 650 -7.0% 680 -0.3% Landesbank BW 710 1.6% 690 1.2% Market Securities 715 2.3% --- MET Capital Advisors 704 0.7% --- --- Moody’s Analytics 712 1.9% 715 4.8% Morgan Keegan & Co. 703 0.6% 683 0.2% Morgan Stanley & Co. 710 1.6% --- National Bank Financial 700 0.1% 690 1.2% Natixis 700 0.1% --- Nomura Securities 706 1.0% 703 3.1% Nord/LB 690 -1.3% 680 -0.3% OSK Group/DMG 700 0.1% --- O’Sullivan 710 1.6% 690 1.2% Parthenon Group 716 2.4% 695 1.9% Pierpont Securities 720 3.0% --- PineBridge Investments 734 5.0% --- PNC Bank 720 3.0% --- Raiffeisenbank International 740 5.9% 730 7.0% Raymond James 710 1.6% 700 2.6% RBC Capital Markets 685 -2.0% --- RBS Securities 690 -1.3% --- Scotia Capital 700 0.1% --- SMBC Nikko Securities 700 0.1% 690 1.2% Societe Generale 775 10.9% 735 7.8% Standard & Poor’s 680 -2.7% 675 -1.0% Standard Chartered 705 0.9% 690 1.2% Stone & McCarthy Research 690 -1.3% 680 -0.3% TD Securities 715 2.3% 705 3.4% UBS 680 -2.7% 680 -0.3% Union Investment 685 -2.0% 685 0.4% University of Maryland 690 -1.3% 680 -0.3% Wells Fargo & Co. 710 1.6% --- WestLB AG 697 -0.3% 686 0.6% Westpac Banking Co. 713 2.0% 686 0.6% Wrightson ICAP 700 0.1% 690 1.2% ================================================================
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