Stockpiles in warehouses monitored by the Comex have gained more...

Stockpiles in warehouses monitored by the Comex have gained more than fourfold in the past year as a slowdown in the housing market slashed demand for the metal.

Construction spending fell for a third month in November as homebuilding fell by 1.6 percent, the eighth-straight drop, the Commerce Department said this week. Fewer Americans signed contracts to buy previously owned homes in November, suggesting continuing weakness in the real estate, an industry group said yesterday.

`Leading Indicator'

``If overall housing sales stay slow, you could easily pare another 30 or 40 cents off of copper,'' Frank McGhee, head metals trader at Intergrated Brokerage Services Inc., said yesterday. ``Copper is a leading indicator. It's very sensitive to perceived economic conditions.''

A slowdown in new-home construction shaved 1.2 percentage points off of growth in the third quarter, the biggest decline in 15 years. Builders account for 46 percent of copper use, putting about 400 pounds of the metal in the average U.S. home, according to the Copper Development Association.

``Demand is down in the U.S. and outside of the states,'' Guido of Societe Generale said. ``Now, we have the reality of a surplus of metal.''

Inventories monitored by the London Metal Exchange have doubled in the past 12 months to the highest since March 2004. Supplies will exceed demand by 230,000 metric tons this year, Goldman Sachs Group Inc. said in a report last month.

On the LME, copper for delivery in three months fell $715, or 1.3 percent, to $5,640 a metric ton. Prices have tumbled 11 percent this week.

Before today, prices in New York still gained 26 percent in the past year. Copper reached a record $4.04 a pound in May after labor disputes and mine accidents led to supply disruptions.

To contact the reporter on the story: Millie Munshi in New York at [email protected] ;