Housing Rose in January
Housing starts in the U.S. rose in January to a higher level than anticipated, a sign that government support is helping to stabilize the real estate market.
Work began on 591,000 houses at an annual rate last month, up 2.8 percent from December, figures from the Commerce Department showed today in Washington. Starts were projected to increase to a 580,000 pace, according to the median estimate of 77 economists surveyed by Bloomberg News. Permits, a sign of future construction, fell less than anticipated after rising in December to the highest level since October 2008.
The extension and expansion of a homebuyer tax credit may boost demand in the coming months. At the same time, builders will have to contend with mounting foreclosures and an unemployment rate that’s projected to end the year at 9.5 percent.
“We’re in a slow and steady progress phase of the housing recovery,” said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast new-home construction would increase to a 590,000 pace. “The trend will be upward, but it’s going to be a bumpy path higher.”
Estimates for January starts in the Bloomberg survey of 77 economists ranged from 530,000 to 700,000. The government revised December’s reading to a 575,000 pace from the 557,000 previously estimated.
Stock-index futures maintained gains after the figures. Futures on the Standard & Poor’s 500 Index rose 0.5 percent to 1,098.8 at 8:38 a.m. in New York.
For all of 2009, builders broke ground on 554,500 houses, the fewest since records began in 1959. The annual rate was down 39 percent from 905,500 in 2008, the second-lowest level on record.
Today’s report showed building permits in January decreased 4.9 percent to a 621,000 pace from a 653,000 rate in December. Permits were forecast to fall 5.1 percent to a 620,000 rate.
Construction of single-family houses increased 1.5 percent to a 484,000 pace.
Work on multifamily homes, such as townhouses and apartment buildings, climbed 9.2 percent to an annual rate of 107,000.
Three of four regions showed an increase in starts in January, led by a 10 percent gain in the Northeast. The West showed an 8.9 percent increase and the South posted a 1 percent gain.
Part of the increase in January housing starts may reflect warmer weather, compared with the monthly average and colder- than-average temperatures in December. The previous month was the 14th coldest December and the 11th wettest in 115 years of record-keeping, according to the National Climatic Data Center in Asheville, North Carolina.
Obstacles remain to a sustainable housing recovery. Rising foreclosures are adding to inventory and may discourage some builders from beginning construction. A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast last month.
Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005.
President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of that month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April.
Confidence among U.S. homebuilders in February rose more than anticipated, the National Association of Home Builders/Wells Fargo said yesterday. The group’s index increased to a three-month high of 17 in February from 15 the prior month. Readings below 50 mean most respondents view conditions as poor.
Any sustained housing recovery will require gains in employment, economists said. The U.S. has lost 8.4 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg earlier this month forecast joblessness will end the year at 9.5 percent, down from January’s 9.7 percent unemployment rate reported by the Labor Department.
D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, this month reported its first quarterly profit since 2007.
“We expect our September quarter will be the most challenging as a tax credit support for home sales will have expired,” Donald J. Tomnitz, president and chief executive officer, said during a Feb. 2 earnings call.