December 27, 2016 / 12:02 PM / 7 months ago

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

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SAO PAULO, Dec 27 (Reuters) - A widely followed indicator of homebuilding activity in Brazil remained at a 12-year low in October, reflecting the burden of a prolonged recession and eroding confidence among potential homebuyers.

The so-called Radar Abrainc-Fipe indicator, which groups 12 variables into an index measuring homebuilding activity, fell 1.1 points on an annual basis to 2.3 points, the lowest since records began in January 2004, university research center Fipe and industry group Abrainc said on Tuesday.

While the variables more closely correlated to consumer confidence and credit outlook showed some improvement, the components tied to demand for homebuilding suffered due to unemployment and salaries eroded by inflation, the statement said. The indicator dropped 0.1 point from September.

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 construction and real estate companies trading in the São Paulo Stock Exchange fell 7.4 percent in the last three months. (Reporting by Ana Mano, editing by Louise Heavens)

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