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WASHINGTON: Permits for future US home construction rose to their highest level in nearly 5½ years in October, suggesting the housing market recovery remained intact despite recent signs of slowing down.
The Commerce Department said yesterday building permits jumped 6.2% to a seasonally adjusted annual rate of 1.03 million units. That was the highest rate since June 2008. Permits increased 5.2% in September.
August’s permits were revised to a 926,000 unit pace from the previously reported 918,000 units. Permits lead housing starts by at least a month.
The department postponed the release of housing starts and completions for September and October until Dec 18 because the collection of data was affected by a 16-day shutdown of the government last month. November data also will be published at that time.
The partial shutdown of the federal government also delayed the publishing of the September and October permits reports.
Economists polled by Reuters had expected building permits at a 930,000 unit rate in October. While permits are not counted in GDP, they are a key indicator of economic activity and the sturdy gains in September and October should ease concerns that the housing market recovery was stalling.
Higher mortgage rates have slowed the pace of home sales, but demand for accommodation as household formation continues to recover from multi-decade lows is expected to keep residential construction supported.
Home re-sales fell in October for a second straight month and confidence among single-family home builders has ebbed somewhat since nearing an eight-year high in August.
Permits for the multifamily home sector surged 15.3% in October after increasing 20.1% in September. Permits for buildings with five units or more reached their highest level since June 2008. — Reuters
This article first appeared in The Edge Financial Daily, on November 27, 2013.
