A worker measures wood for a house under construction at the KB Home Vineyard Crossing Community in Livermore, California.
David Paul Morris | Bloomberg | Getty Images
U.S. The home building hit back in October and permits for future housing construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates.
Housing starts rose 3.8% to a seasonally adjusted annual rate of 1
September data was revised to show that home construction slowed to a rate of 1.266 million units, rather than reducing to a rate of 1.256 million units previously reported.
Economists polled by Reuters had expected housing starts to rise 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 rose 5.0% to a rate of 1.461 million units in October, the highest level since May 2007. The permits were driven by the single-family segment, which rose 3.2% to the highest level since August 2007.
The market, the the most sensitive interest-rate sector, has perked up in recent months, catching up to the Federal Reserve's monetary easing, which has pushed home mortgage rates from last year's multi-year highs.
However, the sector, which accounts for around 3.1% of the economy, continues to be plagued by land and labor shortages. A Monday survey showed confidence among home builders hovering near a more than 1-1 / 2-year high in November.
However, builders complained of "labor shortages and government restrictions," adding that "shortages of goods are still a serious problem, especially among custom builders."
Housing starts were postponed to more than 12 years in August. But progress could slow, with mortgage rates backed up over the past two months.
Last month, the Fed cut interest rates for the third time this year, signaling a break in the relief cycle that began in July when it lowered borrowing costs for the first time since 2008.
While fears of a recession have plunged in recent months amid an escalation Due to trade tensions between the US and China, the economy is still slowing amid a fall in consumer spending and persistent weakness in business investment and production.
The 30-year fixed-rate mortgage rate is currently at 3.75%, still below the 4.94% peak in November 2018, according to data from mortgage loan financing agency Freddie Mac.
Housing investment declined in the third quarter following a six straight quarter contract, the longest stretch since the recession of 2007-2009.
Detached housing, which constitutes the largest part of the housing market, increased 2.0% to a rate of 936,000 units in October, the highest in 9 months. Single-family homes rose in the West, the Midwest and the populous South last month. They fell in the Northeast.
Starting for the volatile multifamily home rose 8.6% to a rate of 378,000 units in October. Permits for the construction of family homes increased 8.2% to a rate of 552,000 units last month.