Ahead of the Bell: Housing Starts
Source: Business Week
New home construction is expected to rise for the fourth consecutive month in April. If the report comes in as expected, it’s likely to raise hopes that the building industry will help sustain the economic rebound.
Economists surveyed by Thomson Reuters expect housing construction to rise by 3.8 percent to a seasonally adjusted annual rate of 650,000 in April. The Commerce Department will release the report at 8:30 a.m. EDT Tuesday.
The housing industry in good times is a major generator of jobs and economic growth. But builders have had to compete with deeply discounted foreclosures and have been leery about starting new building projects.
The report also is expected to show that applications for new building permits, considered a good sign of future activity, dipped to an annual rate of 680,000 in April. That’s down 0.7 percent from a March level of 685,000.
In March, housing construction posted a better-than-expected performance, rising to the highest level in 16 months on the strength of apartments and condominium building. Construction of single-family homes dipped slightly.
Evidence that the building industry is climbing back came Monday in a survey that showed homebuilders are more optimistic. The National Association of Home Builders said its housing market index, which tracks industry confidence, rose three points this month to 22, the highest reading since August 2007.
Sales and orders of homes have improved this year helped by low mortgage rates and two government tax credits — $8,000 for new buyers and $6,500 for current owners who buy and move into another property.
The government incentives helped stir up home sales this spring. Many buyers raced to purchase a home in time to qualify before they expired at the end of April.
Without the tax credits, however, many experts anticipate home sales will slow in the second half of this year. In addition, high unemployment and tight mortgage lending continue to keep many buyers on the sidelines.
Sales of new homes rose 27 percent in March, the biggest monthly increase in 47 years. Still, new home sales are down 70 percent from their peak in July 2005.
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Another tragedy in the making. I guess we won’t stop unless we have destroyed everything.