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WASHINGTON (Reuters) - U.S. housing starts rose more than expected in March to their highest level since November 2008 and permits to build new homes scaled a 17-month peak, offering hope the housing market recovery remained on course.

The Commerce Department said on Friday housing starts rose 1.6 percent to a seasonally adjusted annual rate of 626,000 units. February's housing starts were revised up to show a 1.1 percent increase, which was previously reported as a 5.9 percent drop.

Analysts polled by Reuters had expected housing starts to rise to 610,000 units. Compared to March last year, starts were 20.2 percent higher.

"Some of the worries about the housing market have been alleviated by this report," said Cary Leahey, an economist at Decision Economics in New York.

U.S. stock index futures held on to small losses after the data, while Treasury debt prices were steady at slightly higher levels. The U.S. dollar was little changed.

Groundbreaking for single-family homes slipped 0.9 percent last month to an annual rate of 531,000 units after rising 5.7 percent in February. Starts for the volatile multifamily segment surged 18.8 percent to a 95,000-unit annual pace after falling 21.6 percent the prior month.

The housing market recovery has stalled in recent months and sales have dropped after strong gains in the second half of 2009. The sector, a key factor behind the worst economic downturn since the Great Depression, remains one of the headwinds confronting the recovery.

Analysts are cautiously optimistic the improving economic conditions, particularly the resumption of job growth, will help put the sector back on an upward trend and March's housing starts data will be seen as a step in that direction. A National Association of Home Builders survey on Thursday showed home-builder sentiment rose to a seven-month high in April as consumers rushed to take advantage of a home buyer tax credit. Better economic conditions also helped.

New building permits, which give a sense of future home construction, jumped 7.5 percent to a 685,000-unit pace last month -- the highest level since October 2008, the Commerce Department said. That compared to analysts' forecasts for 630,000 units. Permits rose 2.4 percent in February. Permits were up 34.1 percent from March 2009, the biggest year-on-year gain since February 1992.

New home completions fell 3.1 percent to a record low 656,000 units. The inventory of total houses under construction dropped 1.4 percent to an all-time low of 489,000 units in March, while the total number of units authorized but not yet started soared 7.5 percent to 103,200 units -- the highest level since June.

Reported by Reuters/Chris Keane (04/16/2010)

April 15 (Bloomberg) -- U.S. homebuilder bonds have recovered to levels last seen before the global credit freeze as investors gain confidence the economic recovery is strong enough to prevent defaults.

Yields fell to within 6.06 percentage points of Treasuries, the narrowest since August 2007, according to Bank of America Merrill Lynch’s U.S. High-Yield, Homebuilders/Real Estate Index. Hovnanian Enterprises Inc.’s debt has surged 11 percent since New Jersey’s largest homebuilder posted its first profit in more than three years on March 2.

“There is no question that the worst is over for homebuilders,” said Christopher Towle, who helps oversee $47 billion in fixed-income assets, including Hovnanian debt, as a partner at Lord Abbett & Co. in Jersey City, New Jersey. “The numbers show it.”

Investors are growing more bullish as the economy recovers from the worst recession since the 1930s, unemployment falls from a 17-year high and the Federal Reserve supports the housing market with record-low interest rates. Calabasas, California- based Ryland Group Inc., the homebuilder that targets first-time buyers, will sell bonds as soon as today, a person familiar with the deal said.

Home affordability for families with a median income rose in the fourth quarter to about the highest level since records began in 1986, according to National Association of Realtors data compiled by Bloomberg.

“It is hard to view this as anything but bullish,” Citigroup Inc. analysts led by Tom Fitzpatrick in New York said in an April 13 report. “There are good reasons to suspect some ‘brighter days’ are around the corner.”

Reported by Bloomberg BusinessWeek (04/15/2010)

Memphis, Tenn. — The sale of new homes in Memphis is picking up, a sign that construction in the residential real estate market may be resurging after a four-year slide.

MarketGraphics of Memphis LLC, which reports housing activity three times a year, reports that between Nov. 1, 2009, and March 1, there were 398 new home starts, compared to 358 a year ago in the five-county Memphis metropolitan area.

At the same time, the gross inventory of homes has dropped 16% from its last report in November to 1,975 homes. That’s a 65% decline from March 2009.

Don Berge, president and owner of MarketGraphics of Memphis, says the numbers are clear evidence that the market is starting to lift off in terms of construction and closings compared to last year, the worst in decades.

Reported by Memphis Business Journal (04/09/2010)