Ahead of the Bell: Housing Starts

AP News
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Posted: Oct 19, 2010 7:12 AM
Ahead of the Bell: Housing Starts

Home construction is expected to show a dip in September, as the weak economic outlook made builders keep their bulldozers idle.

Economists expect construction of new homes and apartments in September to have fallen to 3 percent from a month earlier to a seasonally adjusted annual rate of about 580,000, according to a survey by Thomson Reuters.

The Commerce Department report is scheduled to be released at 8:30 a.m. EDT Tuesday.

Newly approved building permits, a sign of future activity, are forecast to rise 1.9 percent to a seasonally adjusted annual rate of 580,000.

High unemployment, slow job growth, and tight credit have kept people from buying homes. The housing market suffered its worst summer in more than 10 years, despite the lowest mortgage rates in five decades.

Home construction rose 10.5 percent in August from a month earlier. It was boosted by a 32 percent jump in apartment and condominium construction, a volatile part of the market. Construction of single-family homes, the bulk of the market, grew only about 4 percent.

Builders are pessimistic about the U.S. housing market, but feeling a little better than over the summer. The National Association of Home Builders said Monday its monthly index of builders' sentiment rose in October to 16, the first increase in five months. The index had been at 13 for the past two months, the lowest level since March 2009.

This fall's home sales may improve, but not by much. A huge backlog of foreclosed properties is dominating the market and providing competition for builders.

Weak sales mean fewer jobs in the construction industry, which normally helps power economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the builders' trade group