Real estate in Brazil's biggest market to rebound in 2017 -industry

SAO PAULO, March 14 (Reuters) - Real estate activity in the greater São Paulo area, Brazil’s largest market, should rebound this year as interest rates fall and the government pushes through key economic reforms, a construction industry group said on Tuesday.

Housing starts and sales should grow between 5 percent and 10 percent, Secovi-SP chief economist Celso Petrucci said, adding that those figures may be revised upwards by mid-year. The group expects home prices to rise 10 percent in the period.

The forecasts underscore newfound optimism in an industry that has struggle in recent years with scarce credit, high unemployment and sales cancellations amid a harsh recession.

The improved outlook would be good news for Cyrela Brazil Realty SA, MRV Engenharia e Participações SA and Eztec Empreendimentos e Participações SA , some of Brazil’s largest home builders.

An index gauging performance of listed real estate companies at the São Paulo Stock Exchange is up 26 percent over the past three months.

Analysts expect Latin America’s largest economy to recover by year-end albeit at a gradual pace as President Michel Temer advances with sweeping pension, labor and tax reforms.

In 2016, housing starts in the greater São Paulo area fell 30 percent from a year earlier to just below 27,000 units, while sales of new residential property dropped 24 percent to roughly 25,000 units, according to Secovi-SP, the weakest performance since records began in 2004.

In recent months, construction companies have lowered prices to reduce inventories after a rash of cancelled sales.

Reporting by Gabriela Mello; Writing by Ana Mano; Editing by Lisa Shumaker