Builders Probably Broke Ground on Most U.S. Houses in 11 Months

Builders Probably Broke Ground on Most U.S. Houses in 11 Months


Nov. 18 (Bloomberg) -- Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

Government tax credits and lower prices and borrowing costs may spur residential sales and construction in coming months, indicating housing will help the economy recover. A lack of inflation has made it possible for policy makers to pledge to hold interest rates down for an “extended period” in a bid to sustain the expansion and bring down joblessness.

“Housing is starting to turn,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “One problem is the still-soft job market, which may hold back the recovery. We’re not going to return to the peak for quite some time to come.”

The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from 570,000 to 630,000, after 590,000 in September.

Also at 8:30 a.m., the Labor Department will release the consumer price gauge. Compared with the same time last year, prices were probably down for the eighth consecutive month.

Excluding Food, Fuel

Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in September, according to the Bloomberg survey median. The gauge was probably up 1.6 percent in the 12 months to October, according to the survey median.

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 1.7 percent to 2 percent. It was up 1.3 percent in the 12 months to September.

The housing report may also show building permits, a sign of future construction, increased 0.9 percent to a 580,000 annual pace, according to the survey.

Construction may further improve after President Barack Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Tax Credit

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo’s confidence index held at 17 in November for a second month, the group said yesterday.

Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder, last week said orders surged 42 percent in the quarter ended Oct. 31. The Horsham, Pennsylvania-based company also said cancellations slowed and revenue beat analysts’ estimates.

Gains in consumer confidence, more stable home prices and fewer unsold houses “suggest that the new home market should be improving,” Chief Executive Officer Robert Toll said in a statement. “We sense that it is, though slowly and through choppy waters.”

The Standard & Poor’s Homebuilder supercomposite index is up 72 percent since March 9, outpacing gains in the broader S&P 500 gauge that’s increased 64 percent from the 12-year low reached that day.

A sustained rebound still requires an improvement in the job market. The median estimate of economists surveyed this month anticipated unemployment, which reached a 26-year high of 10.2 percent last month, will top 10 percent through the first half of 2010.

Foreclosure filings exceeded 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay their bills, RealtyTrac Inc. said last week.

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