November 29, 2016 / 12:00 PM / a year ago

Brazil's recession keeps homebuilding index at 12-year low

SAO PAULO, Nov 29 (Reuters) - A widely followed indicator of homebuilding activity in Brazil remained at a 12-year low in September, reflecting the burden of a prolonged recession, low credit availability and eroding confidence among potential homebuyers.

The so-called Radar Abrainc-Fipe indicator, which groups 12 variables into an index to measure homebuilding activity, fell by 1.3 point on an annual basis to a reading of 2.2 points, the lowest since records began in January 2004, university research center Fipe and industry group Abrainc said on Tuesday.

While the indicator showed an improvement in the variables more closely correlated to macroeconomic activity, the components tied to demand for homebuilding and credit continued to suffer, the statement said. The indicator dropped 0.2 point from August, when it touched a 12-year low with a reading of 2.4.

Updated monthly, the Abrainc-Fipe index shows the state of Brazil’s housing market on a scale of 0 to 10, with 10 expressing the most favorable conditions. It reflects a combination of macroeconomic, credit market and demand data relative to the Brazilian real estate industry.

An index grouping Brazil’s construction and real estate companies trading in the São Paulo Stock Exchange .IMOB fell 12.6 percent in November from the last trading day of the previous month. (Reporting by Ana Mano; Editing by David Gregorio)

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