Published: Fri, November 18, 2016
Economy | By Melissa Porter

Housing starts see greatest leap in almost a decade

Housing starts see greatest leap in almost a decade

USA new-home construction jumped to a nine-year high in October as an outsized advance in the number of apartment projects accompanied a strong pickup for single-family housing. This month's result marks a significant 10.7% increase from September's upwardly-revised rate of 785,000, and represents a 21.7% gain compared to October 2015, when the estimate was 714,000.

Total privately-owned housing completions increased 5.5% month-over-month to a seasonally adjusted annual rate of 1,055,000.

"Building permit data suggest that October housingstarts will have more than reversed September's decline", said Matthew Pointon, a property economist at Capital Economics.

Housing starts jumped dramatically in October to the highest level in a decade.

Residential starts surged 25.5 per cent to a 1.32 million annualised rate, the fastest since August 2007 and exceeding the highest projection in a Bloomberg survey, a Commerce Department report showed Thursday.

The rebound in multifamily starts was expected after the sharp fall-off in September, but the real strength in this report comes from accelerating single-family starts. September permits were unrevised at 1.225 million.

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Housing starts see greatest leap in almost a decade

"Controlling for the number of household in the US, housing starts are only about 66% of their 50-year average", Trulia Chief Economist Ralph McLaughlin said. Over the medium term we expect momentum to shift as the pace of single-family starts accelerates and the recovery in multifamily matures.

Analysts were more encouraged, however, by a almost 22 percent year-over-year jump in single-family starts. The construction gauges have rebounded since 2011, but the pace of gains slowed over the past year.

Economists had forecast that housing starts rose by 10.4% at a rate of 1.156 million, while building permits fell 2.7% at a rate of 1.193 million.

Not only did single-family starts in each of the four USA regions the Census data tracks grow strongly from September to Ocotber, the regions are all showing significant strength year to date, when compared to the same period of 2015.

The National Association of Home Builders and Wells Fargo reported that the Housing Market Index (HMI) was unchanged in November at 63. Steady job growth, wage gains and low interest rates on mortgages have supported home buying.

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