Builders broke ground in November on the most houses in over a year, led by a three-year high on work in multifamily units, a sign the market is stabilizing heading into 2012.
Starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the highest level since April 2010, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, also climbed to a more than one- year high.
Work on multifamily units like apartments and townhouses is surging as the rental market improves. Single-family-home construction is strengthening as lower home prices and borrowing costs hovering near a record low draw in some buyers, even as builders face competition from existing houses as another wave of foreclosures throws more marked-down properties on the market.
“It’s a solid report,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who had the highest forecast in the Bloomberg survey. “For months we’ve been flagging the strength in multifamily construction, but now we’re starting to get signs that single-family is pulling itself off the canvas.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in March rose 1.3 percent to 1,214.1 at 8:46 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 1.85 percent from 1.81 percent late yesterday.
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Oil Rises a Second Day on Signs U.S. Crude Supplies Shrank, Iran Outlook
Oil rose for a second day in New York on forecasts that U.S. crude stockpiles declined for a second week and speculation that further sanctions against Iran will curb supply from OPEC’s second-largest producer.
Futures advanced as much as 1.7 percent, extending yesterday’s 0.4 percent gain. U.S. crude inventories fell by 2 million barrels last week, according to a Bloomberg News survey before tomorrow’s Energy Department report. Gulf Cooperation Council leaders are in Saudi Arabia for a meeting that may address responses to Iran’s nuclear program.
“In the U.S., the economy is on the road to recovery, with falling unemployment and consistently improving growth against a background of low and falling oil stockpiles,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London. “In Europe growth is virtually non-existent.”
Crude for January delivery climbed as much as $1.62 to $95.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract, which expires today, was at $95.49 at 1:20 p.m. London time. The more actively traded February future gained $1.55 to $95.60. Prices are 4.5 percent higher this year after rising 15 percent in 2010.
Brent oil for February settlement on the London-based ICE Futures Europe exchange rose as much as $2.11, or 2 percent, to $105.75 a barrel. The European benchmark contract was at a premium of $10.05 to New York-traded West Texas Intermediate grade for the same month. The front-month spread widened to a record $27.88 on Oct. 14.
European Economy
Crude also gained as the euro advanced against the dollar after Spain’s borrowing costs dropped at a sale of three- and six-month bills. The nation sold 5.64 billion euros of the debt, exceeding its maximum target of 4.5 billion euros.
Data today from Germany indicated Europe’s largest economy is weathering the region’s debt crisis. The nation will probably avoid a recession, two economic institutes that advise Chancellor Angela Merkel’s government said, and figures from the Ifo institute showed business confidence unexpectedly rose for a second month in December.
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