WASHINGTON -- U.S. home building jumped in October by 3.8%, the strongest pace since the beginning of the year, a positive sign for the overall economy as developers anticipate steady demand.
The Commerce Department said Tuesday that housing starts reached a seasonally adjusted annual rate of 1.31 million.
Starts for single-family houses were up 2% to 936,000 in October, largely because of construction in the West and South. Building permits for single-family homes climbed 3.2% to a 909,000 pace that was the fastest since August 2007.
Construction of apartment buildings rose 6.8% from the prior month, while permits rose 8.2%.
Overall building permits, a measure of future construction, rose 5% in October to 1.46 million, the most since May 2007. The bulk of the gains in permits so far this year has been for apartment complexes, while permits for single-family houses has slumped 1.5% for the year.
About 181,000 homes were authorized but not yet started, the most since March, indicating a growing backlog for builders.
Lower mortgage rates and a healthy job market have aided the housing market in recent months, yet housing starts are still down 0.6% year-to-date as a shortage of land and high construction costs have limited building. Affordability is a problem for would-be buyers as increases in home prices have outstripped wage growth.
The average 30-year mortgage has an interest rate of 3.75%, down from 4.94% a year ago, according to mortgage buyer Freddie Mac. Cheaper borrowing costs have fueled greater demand from buyers, but a broader shortage of homes for sale has caused prices to generally rise faster than incomes since 2012 when the market began to recover from the recent recession.
U.S. home-builder sentiment ticked down in November after four consecutive months of gains, private data showed Monday as the outlook among builders in the South soured. The gauge remains elevated and optimism for sales over the next six months rose to the highest since May 2018.
Data out later this week is forecast to show existing home sales, which make up the vast majority of home transactions in the U.S., increased in October from the prior month in a sign that the housing market continues apace. Also, new-home sales, which make up about 10% of sales but are a timelier indicator, remained close to an almost 12-year high.
Information for this article was contributed by Josh Boak of The Associated Press and by Katia Dmitrieva of Bloomberg News.
Business on 11/20/2019