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U.S. single-family homebuilding drops; construction backlog soars

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November 17, 2021

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. single-family homebuilding tumbled in October while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption on the housing market from an ongoing shortage of materials and labor.

Though the report from the Commerce Department on Wednesday showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment. This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices.

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“Residential housing construction activity continues to flounder; no one has figured out how to produce more homes for Americans where shortages and home price inflation persists,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% a seasonally adjusted annual rate of 1.039 million units last month. Starts fell in all four regions.

Homebuilding has essentially been treading water this year as builders battle shortages and higher prices of raw materials. A survey from the National Association of Home Builders on Tuesday showed confidence among single-family homebuilders rose for the third straight month in November, but noted that “supply-side challenges, including building material bottlenecks and lot and labor shortages, remain stubbornly persistent.”

Lumber, which is used for framing, remains expensive and prices for copper, another essential material in homebuilding, are high. In addition, there were about 333,000 job openings in the construction industry as of the end of September.

The materials squeeze could ease during winter, a typically slow season for homebuilding in the Northeast and Midwest.

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Starts for buildings with five units or more increased 6.8% to a rate of 470,000 units last month. With single-family homebuilding declining, overall housing starts slipped 0.7% to a rate of 1.520 million units in October.

Economists polled by Reuters had forecast starts rebounding to a rate of 1.576 million units.

Starts have declined from the 1.725 million unit-pace scaled in March, which was more than a 14-1/2-year high.

Still, home building remains underpinned by a severe shortage of previously owned homes on the market, which has resulted in record house price increases.

The backlog of single-family houses authorized for construction but not yet started jumped 4.8% to a rate of 152,000 last month, the highest since August 2006.

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Permits for future homebuilding increased 4.0% to a rate of 1.650 million units in October. Single-family permits rose 2.7% to a rate of 1.069 million units, leaving them just above starts.

Permits for buildings with five units or more surged 6.5% to a rate of 528,000 units. Workers returning to offices and schools reopening for in-person learning, thanks to COVID-19 vaccinations, are fueling demand for rental apartments.

Housing completions were unchanged at a rate of 1.242 million units. Single-family home completions dropped 1.7% to rate of 929,000 units.

The stock of single-family housing under construction increased 1.4% to a rate of 726,000 units last month.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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