U.S. housing starts may have cooled in April following the biggest gain in almost a year the previous month, according to a survey of economists in advance of today's government report. The Commerce Department may report that housing starts fell to a 1.98 million-unit annual rate in April, the median forecast of 62 economists in the Bloomberg News survey. Starts surged 6.4 percent to 2.01 million in March, the biggest monthly advance since they rose 7.3 percent in May 2003. The report is set for an 8:30 a.m. release in Washington.
An improving U.S. economy and a stronger jobs market have helped bolster demand for homes, even as mortgage rates rise. The average rate on a 30-year fixed mortgage jumped to 6.34 percent this week, the highest since September, according to Freddie Mac, the second-biggest U.S. mortgage-finance company. ``The turnaround in interest rates actually probably is stimulating home buying at least in the short term,'' said David Seiders, chief economist at the National Association of Homebuilders. ``The old idea of the fence sitters jumping into the market is probably holding true at this point.'' The Commerce Department's report may also show that building permits rose slightly in April to a 1.96 million rate from 1.946 million in March, according to the median of economists forecasts in the Bloomberg survey.
Borrowing Costs
Mortgage rates have increased as the U.S. economy added more jobs than expected in April and orders increased, suggesting the Federal Reserve may raise interest rates from the current 1 percent as early as next month. The Fed on May 4 dropped a pledge to be ``patient'' with monetary policy, saying the economy is expanding at a ``solid rate.'' The average 30-year fixed mortgage rate in April was 5.83 percent, up from March's 5.45 percent, and surpassing the year ago average by 0.02 percentage point.
The Mortgage Bankers Association's gauge of applications to purchase homes rose 2.4 percent to 494.30 in the week ended May 8. The level was the highest since 501.6 in the week ended Jan. 16, according to the association's statistics. Sales of existing single-family homes, condominiums and cooperatively owned apartments dropped 1.4 percent to a seasonally adjusted 7.14 million pace in the first quarter from 7.24 million in the fourth quarter, the National Association of Realtors said last week. Sales have been slowing since a record 7.36 million in the third quarter of last year. ///www.bloomberg.com