Builders Probably Broke Ground on More U.S. Houses in November
Builders in November probably broke ground on more U.S. homes, and gains in consumer prices were within the Federal Reserve’s long-term forecasts, economists said reports today may show.
Housing starts rose 8.5 percent to an annual rate of 574,000, according to the median forecast of 78 economists surveyed by Bloomberg News. A Labor Department report may show the cost of living climbed 0.4 percent last month.
Government tax credits, lower home prices and borrowing costs near record lows may stabilize sales and construction into the new year. A lack of inflation means Fed Chairman Ben S. Bernanke and his colleagues today will probably reiterate a pledge to keep the benchmark interest rate low for “an extended period” to ensure the economic recovery is sustained.
“The construction market is starting to come back,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “Residential construction is going to contribute to growth going forward.”
The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Survey estimates ranged from 540,000 to 620,000.
Also at 8:30 a.m., the Labor Department’s report may show consumer prices compared with the same time last year rose 1.8 percent, according to the survey median.
Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in October, according to the survey median. The gauge was probably up 1.8 percent in the 12 months to November, the survey showed.
Inflation Measure
Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.8 percent to 2 percent. That gauge, which is typically lower than the CPI, was up 1.4 percent in the 12 months to October guaranteed payday loans.
The housing report may also show building permits, a sign of future construction, increased 3.4 percent to a 570,000 annual pace, according to the survey.
Favorable weather probably also played a role in boosting construction last month, according to IHS Global Insight’s Newport. November was the third warmest in 115 years of record keeping, according to the National Climatic Data Center, giving builders an opportunity to keep working. By contrast, October was the wettest in the past century, contributing to the 11 percent drop in starts that month.
President Barack Obama’s extension last month of a first- time homebuyers’ tax credit of as much as $8,000 until April 30 will also give builders reason to speed up projects over the next couple of months.
Toll Brothers
Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder that reported a 42 percent surge in fiscal fourth-quarter orders, is anticipating a gradual recovery in the market, Chief Executive Officer Robert Toll said during a Bloomberg Television interview on Dec. 11.
“There is a pretty good reservoir of pent-up demand,” he said in New York City. “We don’t know how fast we’re coming back, but we do know we’re coming back.”
The Standard & Poor’s Homebuilder Supercomposite Index has gained 53 percent since March 9, compared with a 64 percent increase in the S&P 500 Index from a 12-year low reached that day.
Any sustained recovery will require gains in employment, economists said. The economy has lost 7.2 million jobs since the recession began, and economists surveyed by Bloomberg early this month forecast joblessness will average 10 percent next year.