A recent jump in housing starts is a sign that the US real estate market is making a comeback, said Mary Rhinehart, new chief executive officer of the building-products unit at Warren Buffett’s Berkshire Hathaway Inc.
Domestic housing starts leaped 15 percent in September to an 872,000 annual rate, the fastest pace since July 2008, according to Department of Commerce figures. Rhinehart, who was named CEO of Berkshire’s Johns Manville unit this week, predicted 850,000 home starts next year and up to 1.6 million in 2017.
“It’s still off of a very low base, but we really believe that this is a start of something good,” Rhinehart told Bloomberg. “We’ve had a lot of glut in housing with all the foreclosures and hangover and whatnot and we really are optimistic that 2013 will be stronger than 2012.” The fiscal cliff of federal government spending cuts and tax increases at the beginning of 2013 may limit building for the next three to six months, Rhinehart warned: “That will all get resolved, but not easily.”
As Berkshire’s chairman and CEO, Buffett has been confident about US housing; the Omaha-Nebraska-based company bought a loan portfolio from bankrupt lender Residential Capital LLC and formed a venture with its real-estate brokerage and Brookfield Asset Management Inc.
Johns Manville, which manufactures insulation and roofing products, runs about $2.5 billion in annual sales and has an estimated 7,000 employees, with factories in North America, Europe and Asia. The Berkshire unit client roster includes the aerospace, building and wind energy industries.