Builders in the U.S. broke ground on the fewest houses in 17 years last month as the real estate recession showed no sign of abating, economists said ahead of a government report today.
Residential starts fell 1.7 percent to an annual rate of 995,000, according to the median of 64 economists surveyed by Bloomberg News. Permits, a gauge of future building, probably fell to a 1.02 million pace from 1.061 million in January.
The Federal Reserve, which is forecast to cut its benchmark interest rate by a full percentage point today, is struggling to stem a meltdown in financial markets that is damaging the economy. Stabilization in housing may be difficult to engineer as property values fall, while lenders tighten borrowing rules and keep mortgage rates elevated.
“Housing will continue to have a drag on growth,'' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “There is more adjustment to come in the level of housing starts that will contribute to paring inventory.''
The Commerce Department is scheduled to issue the starts report at 8:30 a.m. in Washington. Estimates in the Bloomberg News survey ranged from 950,000 to 1.08 million.
A report from the Labor Department at the same time may show that wholesale prices rose 0.4 percent in February after jumping 1 percent the prior month, according to the survey median. Excluding food and energy, prices probably rose 0.2 percent, the survey also showed.
Prices at the retail level were unexpectedly unchanged in March, the Labor Department reported last week. A cooling in inflation would make it easier for the Fed to keep cutting interest rates.
Fed Projection
Investors almost unanimously project the Fed will lower the target for overnight loans between banks to 2 percent from 3 percent following their meeting today payday advance lenders cash advance loan no fax.
On March 16, the central bank cut the rate on direct loans to banks and said it will provide up to $30 billion to JPMorgan Chase & Co. to help finance the purchase of Bear Stearns Cos. after a run on Wall Street's fifth-largest securities firm.
The Fed has been lowering its benchmark overnight rate since the middle of September, after the collapse of U.S. subprime mortgages started to infect markets around the world.
Too many home loans have been “neither responsible nor prudent,'' Fed Chairman Ben S. Bernanke said at a conference on March 14. He called for “strong oversight'' of mortgage lenders.
Foreclosures Surge
Home foreclosure filings jumped 60 percent and bank seizures more than doubled in February from the same month last year as rates on adjustable mortgages rose and property owners were unable to sell or refinance, according to RealtyTrac Inc., a seller of foreclosure data.
The yield on 10-Year Treasury notes averaged 3.59 percent in the first week of March, down almost a full percentage point from mid September as the Fed lowered rates and demand for the relative safety of government debt grew.
During the same period, the average rate on a 30-year fixed mortgage was unchanged at 6.37 percent, according to figures from the Mortgage Bankers Association.
The National Association of Homebuilders said yesterday that confidence among builders held near a record low this month.
Hovnanian Enterprises Inc., New Jersey's biggest homebuilder, last week reached an agreement with banks on new lending terms after slowing home sales made it harder to generate cash. Hovnanian also reported its sixth straight quarterly loss.
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