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Home Construction Jumps to Highest Level Since 2007
U.S. home construction surged in August to the fastest pace since mid-2007 on more apartment projects and single-family houses, a welcome sign for the housing sector that has struggled to gain momentum.
Residential starts climbed 12.3% to a 1.36 million annualized rate after an upwardly revised 1.22 million pace in the prior month, according to government figures released Sept. 18 that topped all estimates in Bloomberg’s survey. Permits, a proxy for future construction, also increased to a 12-year high.
Low mortgage rates and a solid labor market are helping to support sales, prompting a pickup in construction activity and permitting. The figures indicate residential construction, which hasn’t contributed to economic growth since the end of 2017, may be starting to break out of a prolonged slump.
At the same time, uncertainty about the economy, a shortage of labor and lots, and higher materials costs due to tariffs represent challenges for builders and price-conscious homebuyers.
The report is consistent with private data out Sept. 17 that showed sentiment among homebuilders rose in September to the highest in nearly a year, helped by increased optimism about the current sales environment.
Single-family starts rose 4.4% to a 919,000 annualized pace, the strongest since January. Permits increased 4.5% to 866,000, the most since July 2018.
