Builders enjoy best 3-month period since 2008
Builders in November capped the strongest three months for residential construction in four years and permits climbed as record-low borrowing costs buoyed the U.S. housing market.
Starts fell 3 percent to a 861,000 annual rate from a revised 888,000 annual pace in October, the Commerce Department reported Wednesday in Washington. The median estimate of 85 economists surveyed by Bloomberg called for a drop to 872,000. Building permits, a proxy for future construction, advanced to a four-year high.
Low mortgage rates and an improving job market are boosting builders such as Toll Brothers Inc., which are now able to raise prices as sales climb and inventory shrinks. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013.
"We're headed higher and next year is going to be the best year for housing starts that we've seen since 2007," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to an 865,000 pace. "Housing is coming back.
Stock-index futures held earlier gains after the report as President Barack Obama and Republicans continued budget talks. The contract on the Standard & Poor's 500 Index maturing in March rose 0.3 percent to 1,445.3.
Estimates in the Bloomberg survey ranged from 830,000 to 950,000. The prior month was revised down from a previously reported 894,000 pace. The average rate of housing starts from September through November was the strongest since the three months ended August 2008.
So far this year, housing starts are up 27.1 percent from the first 11 months of 2011.
The number of building permits issued climbed 3.6 percent in November to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of economists surveyed by Bloomberg.
Construction of single-family houses fell 4.1 percent to a 565,000 rate. Work on multifamily homes, such apartment buildings, dropped 1 percent to an annual rate of 296,000.
Two of four regions showed a decrease in starts last month, led by a 19.2 percent drop in the West. The Northeast region saw a 5.2 percent decrease, while the Midwest climbed 3.3 percent and the South rose 2.9 percent.