By Ellis Mnyandu
NEW YORK (Reuters) - Stocks headed for a lower open on Friday as a report pointing to further deterioration in housing added to recession fears, offsetting reassuring profits from manufacturer Honeywell International Inc
Government data showed that construction starts on new U.S. homes fell to a new 17-1/2 year low in September as builders scaled back work. Permits for new homes sunk to a nearly 27-year low.
Signs of a continued slump in housing are a blow to investor sentiment and underscore the severity of the credit crisis that has sent the stock market tumbling to five-year lows.
"For the markets themselves, I think that a recession worse than 2000-2001 is already built in, but the housing numbers as well as some of the retail numbers we've been seeing suggest the consumer remains very weak," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
S&P 500 futures fell 12.80 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures tumbled 135 points, and Nasdaq 100 futures fell 24 points.
Shares of home builders looked set to be among the top losers, with Toll Brothers
The Reuters/University of Michigan Surveys of Consumers' preliminary sentiment index for October is due at 9:55 a.m. EDT.
Honeywell reported stronger-than-expected quarterly profit before the bell, joining others like Internet company Google and chip maker Advance Micro Devices Inc
Warren Buffett, writing in the New York Times, said he is buying U.S. stocks. The richest American and head of Berkshire Hathaway Inc
The interbank cost of borrowing dollars, euros and sterling again fell on Friday, indicating efforts to unfreeze lending were working to restore some confidence.
U.S. stocks leapt on Thursday as investors snapped up beaten-down shares the day after Wall Street's worst day since the 1987 stock market crash while consumer companies gained as the price of oil fell.
(Additional reporting by Herb Lash; Editing by Kenneth Barry)
