Housing Starts Climb 6.3% in September
New home construction rose in September after slumping a month earlier, indicating halting progress in the U.S. residential real estate market.
Housing starts climbed 6.3% to a 1.02 million annualized rate from a 957,000 pace in August, the Commerce Department reported Oct. 17. The median estimate of economists surveyed by Bloomberg called for 1 million. Work on multifamily and one-family homes increased.
Construction has improved in fits and starts this year as stricter lending standards and limited growth keep some Americans from taking advantage of mortgage rates at the lowest level since mid-2013. Sustained job gains that fuel faster wage growth would help give the market an additional boost that would include more first-time home buyers.
“The trend in starts continues to be up,” said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio. “As the job market’s gotten better, as the mortgage rates have remained low and in the last week gone even lower, the underlying demand for single-family homes has improved.”
Estimates for September starts in the Bloomberg survey of 76 economists ranged from 955,000 to 1.1 million after a previously reported 956,000 rate in August.
Stock-index futures rallied on speculation central banks will support economic growth with more stimulus, while Morgan Stanley and General Electric Co. reported better-than-estimated profits.
Permits for future projects also increased, rising 1.5% to a 1.02 million annualized pace and pointing to a sustained pace of construction. They were projected to climb to 1.03 million, according to the Bloomberg survey median.
Construction of multifamily projects such as condominiums and townhomes jumped 16.7% to an annual rate of 371,000. Work on single-family properties rose 1.1% to a 646,000 rate in September from 639,000 the prior month.
By region, construction surged 13.9% in the West and 5.3% in the Northeast. Starts were up 4.2% in the South and 3.5% in the Midwest.
The figures stand in contrast to a report Oct. 16 showing builder confidence dropped in October to a three-month low after reaching its highest level in nine years the previous month. Sentiment eased in all four U.S. regions, the National Association of Home Builders/Wells Fargo gauge showed.
