January 18, 2017 / 2:11 PM / a year ago

UPDATE 1-Brazil housing starts jump 76 percent in November -report

(Recasts to add details, additional company data, share performance throughout)

SAO PAULO, Jan 18 (Reuters) - Brazil’s housing starts rose in November at the fastest pace in five months, an industry group said on Wednesday, partly reflecting an improving economic backdrop and quicker issuance of permits following long delays earlier in the year.

The widely followed Abrainc-Fipe index showed a 76.1 percent jump in new housing projects launched in November from a year earlier. In the 12 months ended in November, housing starts rose 10.4 percent, the group known as Abrainc and research institute Fipe said in a report.

Starts might have risen in November as municipal governments sped up the issuance of building permits, said Rafael Menin, co-chief executive officer of MRV Engenharia SA, Brazil’s No. 1 homebuilder for low-income families. Politicians are trying to reignite construction activity to fight record unemployment, even as demand for housing takes longer to recover.

Operational previews have so far shown improving metrics for some of Brazil’s main homebuilders. On Monday, MRV said a lower rate of sales cancellations offset the impact of declining gross unit sales, while shares of Cyrela Brazil Realty SA hit a 21 month-high on Wednesday as starts rose 68 percent.

Overall sales cancellations, which have been a drag on industry profits for the past three years, slumped 20.2 percent to about 3,186 contracts on an annual basis in November, easing the impact of tight credit supply and high borrowing costs.

Homebuilding shares have rallied this week on hopes of a likely revamp in industry rules governing sales cancellations. An index tracking shares of real estate firms has gained 15.2 pct so far this year.

Units sold rose 10.1 percent in November on an annual basis, helping homebuilders’ efforts to keep reducing their inventory of unsold units. The so-called VSO indicator, a measure of home supply, slipped 0.2 percentage points to 7.9 percent, indicating existing supply would cover 12.6 months’ worth of sales, according to the report.

The Abrainc-Fipe indicator, launched in August 2015, is the first national index for the real estate sector, compiling data provided by 20 of 34 Abrainc associate members operating in Brazil. (Reporting by Ana Mano; Editing by Guillermo Parra-Bernal, Dan Grebler and Chizu Nomiyama)

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