Housing starts surge in September to four-year high
Starts jumped to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, Commerce Department figures showed Wednesday in Washington. The median estimate of 81 economists surveyed by Bloomberg called for 770,000. An increase in building permits may mean the gains will be sustained.
A pickup in sales stoked by record-low mortgage rates and population growth combined with dwindling supply indicates construction can continue strengthening, contributing more to economic growth. At the same time, the level of starts remains below the pre-recession peak, limiting how much the industry can boost the rate of expansion.
'The housing market certainly has turned,' said Brian Jones, a senior U.S. economist at Societe Generale in New York, whose forecast for 790,000 starts was among the highest. 'But we still have a long way to go. The good thing is that construction will pull employment with it.'
Estimates in the Bloomberg survey for housing starts ranged from 735,000 to 800,000, and the prior month was revised up to 758,000 from a previously reported 750,000 pace.
Over the past 12 months, work began on 34.8 percent more homes, the biggest year-over-year gain since April.
The brighter building environment has made construction companies less pessimistic. The National Association of Home Builders/Wells Fargo builder sentiment index increased to 41 this month, the highest since June 2006 and the sixth-straight gain, figures showed yesterday. Still, readings below 50 mean more respondents said conditions were poor.
'There is going to be a continued housing recovery over the next few years,' said Larry Seay, chief financial officer at Meritage Homes Corp. in Scottsdale, Ariz., during an investor conference on Oct. 11. 'Pent-up demand that has built up from people deferring household formation is going to help buoy the recovery. High affordability not only with house prices being very low, but also interest rates being as low as they've been in decades, and all that translating into an improved buyer confidence.'
Building permits, a proxy for future construction, jumped to an 894,000 annual rate, also exceeding the median forecast and the most since July 2008. They were projected to rise to 810,000, with a range of 780,000 to 850,000.
The number of permits swelled by 45.1 percent since September 2011, the biggest annual jump since 1983.
Construction of single-family houses climbed 11 percent from August to a 603,000 rate. Work on multifamily homes, such apartment buildings, increased 25.1 percent to an annual rate of 269,000.