Tuesday, 17 April 2012

Residential construction marks best quarter since 2008

Homebuilding in the U.S. climbed in March, marking the best quarter since 2008 and indicating the real-estate industry has steadied, said economists surveyed by Bloomberg News.

Housing starts increased to a 705,000 annual rate last month from a 698,000 pace in February, according to the median estimate of 82 economists. Starts probably averaged 703,000 in the first three months of 2012, the most since the third quarter of 2008.

Warmer weather alongside historically-low lending costs and faster jobcreation may have spurred more homeconstruction at the beginning of 2012. While the number of single-family housing starts last year was the lowest on record, work on multifamily units is providing homebuilders with new business.

“Housing starts are starting to see stabilization,” said Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte. “The numbers are still coming from a very low base, but there’s improvement. We’re also still contending with a lot of the effects from weather.”

The housing starts figures are due from the Commerce Department at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from 670,000 to 750,000.

The report may also show building permits slid by 0.7 percent to a 710,000 annual rate, according to the survey median. In February, the number of applications was at the highest level since October 2008.

Record-breaking warm weather probably boosted construction last month. The average temperature in the U.S. was 51.1 degrees Fahrenheit (10.6 Celsius), 38.6 degrees warmer than the 20th century average and the hottest reported March in records going back to 1895.

Even so, low borrowing costs and better job prospects should support demand for new homes. The average rate on a 30-year fixed mortgage reached an all-time low of 3.87 percent in February and was just a point higher at 3.88 percent in the week ended April 12, according to data from Freddie Mac.

Demand for apartments and condos, buildings that house multiple families, has also kept construction up. Builders began work on 241,000 of such units at an annual pace last month, the second most in more than three years.

Buyers “are starting to feel pressure not to miss this moment,” Lennar Corp. Chief Executive Officer Stuart Miller said during a March 27 conference call with analysts. “The fully-loaded cost of ownership is lower in the most-desirable markets than comparable rental rates.”

New-home orders increased 33 percent in the three months ended Feb. 29, the third-largest U.S. homebuilder by revenue said. Shares of the Miami-company rose to the highest level since 2007 after it reported the orders growth and net income that beat estimates.

Investors also are upbeat about prospects. The Standard & Poor’s Supercomposite Homebuilding Index has advanced 21 percent since the end of last year, more than the 8.9 percent gain in the broader S&P 500. Read More.

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