US Home Construction Reaches Strongest Pace In a Year
WASHINGTON (AP) — Construction of new homes climbed 13.7 percent in October, the biggest jump in a year as builders broke ground on more apartments and single-family houses.
The Commerce Department said Friday that the monthly gain put U.S. housing starts at a seasonally adjusted annual rate of 1.29 million units. That is the best pace for home construction in 12 months.
Housing starts have risen just 2.4 percent year-to-date, largely because fewer apartment complexes are being built. Single-family house construction has driven much of the growth this year in a sign of greater demand from buyers amid a healthy job market.
But recent building trends reversed themselves somewhat in October, with most of the momentum coming from apartment construction. The building of multi-family properties jumped 37.4 percent in October. Construction of single-family houses increased 5.3 percent.
Still, the building of new homes has done little to alleviate the growing shortage of existing homes for sale. This shortage has started to stifle the broader real estate market. Purchases of existing homes have fallen over the past 12 months, according to the National Association of Realtors. The decline largely reflects that there are 121,600 fewer homes on the market during the same period, a 6.4 percent decrease that new construction has been unable to offset.
"For a significant increase in new homes, municipalities are going to have to work harder to make more land available for building," said Robert Frick, a corporate economist with Navy Federal Credit Union.
Construction in the South rose 17.2 percent last month, a sign the region is regaining its footing after damage from Hurricanes Harvey and Irma. Home construction shot up in the Northeast due to ground breakings for apartments. Construction also increased in the Midwest but declined in the West.
Building permits, an indicator of future construction, rose 5.9 percent in October to 1.3 million.
– By John Boak, AP Economics Writer