U.S. Homebuilding Rebounded in October
U.S. homebuilding rebounded in October and permits for future home construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates. The report from the Commerce Department on Tuesday also showed an increase in home completions and the stock of homes under construction, which could help to ease a supply squeeze that has plagued the housing market.
Though housing accounts for a fraction of gross domestic product, it has a bigger economic footprint. The surge in housing activity at the start of the fourth quarter suggested some support for the economy, which is slowing amid cooling consumer spending and persistent weakness in business investment and manufacturing.
“It is cheaper than ever to finance the cost of a new home and home builders are sitting up and taking notice assuming that if they build it, buyers will come,” said Chris Rupkey, chief economist at MUFG in New York. “There won’t be a recession if residential housing construction has anything to say about it.”
Housing starts increased 3.8% to a seasonally adjusted annual rate of 1.314 million units last month, with single-family construction rising for a fifth straight month and activity in the volatile multi-family sector rebounding solidly. Data for September was revised to show homebuilding falling to a pace of 1.266 million units, instead of decreasing to a rate of 1.256 million units as previously reported.
Economists polled by Reuters had forecast housing starts increasing to a pace of 1.320 million units in October. Housing starts advanced 8.5% on a year-on-year basis in October. Building permits surged 5.0% to a rate of 1.461 million units in October, the highest level since May 2007. Permits were driven by the single-family housing segment, which increased 3.2% to the highest level since August 2007.