Ahead of the Bell: Housing Starts

New home construction, building permits likely rose last month as housing market improves

• On 6:24 am EDT, Thursday September 17, 2009

WASHINGTON (AP) -- New home construction likely rose in August after dipping a month earlier as builders regroup from the worst downturn in decades.

Construction of new homes and apartments is expected to grow 3.3 percent to a seasonally adjusted annual rate of 600,000, according to economists surveyed by Thomson Reuters. Building permits, seen as a good indicator of future activity, are expected to rise 3.6 percent to an annual rate of 580,000 units.

The Commerce Department is scheduled to release the report Thursday at 8:30 a.m. EDT.

Builders slammed the brakes on construction after the housing bubble burst, and housing starts plunged to the lowest point in a half-century in April.

Construction then began a recovery, rising to the highest level in seven months in June before slipping a bit in July, led by a 13 percent drop in apartment building. Construction of single-family homes, meanwhile, has risen for five straight months and in July reached the highest level since October 2008.

Builders have been ramping up because buyers want to take advantage of a new federal tax credit for first-time homebuyers. It covers 10 percent of a home price up to $8,000, and is set to expire at the end of November.

Meanwhile, the National Association of Home Builders said Wednesday its housing market index rose in September, reflecting growing optimism in the industry about rising home sales. The trade association said its index rose one point to 19, the highest reading since April 2008.

Buzz up!