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 today 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. (TOL), 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 at 8:57 a.m. in New York.