Ahead of the Bell: US housing starts

WASHINGTON (AP) -- U.S. builders likely broke ground on more homes in December than in November and ended 2012 as the best year for home construction in four years.

Economists expect that builders began construction of houses and apartments at a seasonally adjusted annual rate of 879,000 in December, according to a survey by FactSet.

In November, construction came in at a rate of 861,000. That was a slowdown after months of solid gains, partly because of disruptions caused by Superstorm Sandy.

The Commerce Department is set to release the December report at 8:30 a.m. Eastern.

One encouraging trend is that applications for building permits, a sign of future construction, rose to the most since July 2008.

Housing starts are 80 percent above their recession low, though still well short of the 1.5 million annual rate considered healthy.

Confidence among homebuilders held steady in January at the highest level in nearly seven years, but builders are feeling slightly less optimistic about their prospects for sales over the next six months, according to a survey released Wednesday.

The National Association of Home Builders/Wells Fargo builder sentiment index held at 47, the same as in December and the highest reading since April 2006, just before the housing bubble burst.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at that level or higher was in April 2006 when the reading was 51. It began trending higher in October 2011, when it stood at 17.

The survey came at a time of improving fortunes for homebuilders, many of which have seen sales improve over the past year amid the best market for newly built homes since the housing boom in the middle of the last decade. Steady job gains, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped fuel home sales and drive prices higher, albeit from very low levels.

In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2 1/2-year high.

Those factors have helped make homebuilders more confident and spurred new home construction. But homebuilders' are still warily watching the current standoff in Washington between President Barack Obama and Congress over several approaching budget deadlines, including the need to boost the nation's $16.4 trillion borrowing limit.

If the borrowing limit is not raised before Treasury runs out of options to keep financing the government, probably in late February or early March, that would trigger the country's first-ever default on its debt, something that Obama warned on Monday could make financial markets go "haywire."

Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.

Source: http://news.yahoo.com/ahead-bell-us-housing-starts-103153447.html

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