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 Groundbreaking increased 6.5 percent to a seasonally adjusted annual
pace of 1.21 million units, the Commerce Department said on Tuesday.
It was the sixth straight month that starts remained above 1 million
units, pointing to a sustainable housing recovery. Starts increased
to a 1.13 million-unit rate in August.
Economists polled by Reuters had forecast groundbreaking
on new homes rising to a 1.15 million-unit pace last month.
Housing is one of the few bright spots in the economy, which has
been slammed by soft global demand and a strong dollar, which have
undercut exports, efforts by businesses to reduce an inventory bulge
and weak capital spending in the energy sector.
Economic activity has braked sharply, with third-quarter growth
estimates running below a 1.5 percent annualized rate. The economy
grew at a 3.9 percent rate in the second quarter.
Although residential construction accounts for less than 3 percent
of gross domestic product, housing has a broader impact on the
economy, with rising home prices boosting household wealth and
therefore supporting consumer spending.
Starts for multi-family projects surged 18.3 percent to a 466,000
unit pace, the highest level since June. Multi-family construction
is being driven by demand for rentals, especially by millennials,
who cannot afford to buy their own homes because of higher prices
and debt burdens.
Groundbreaking for single-family homes, the largest segment of the
market, rose 0.3 percent to a 740,000 unit pace. Economists say
single-family building is being constrained by land and labor
shortages.
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Starts in the South, where most of the home construction takes
place, rose 0.6 percent to their highest level since October 2007.
Groundbreaking on housing projects in the West was the highest since
July 2007.
Though building permits fell 5.0 percent to a 1.10 million-unit rate
last month, a six-month low, the weakness is likely to be temporary
amid strong confidence levels among homebuilders.
A survey on Monday showed builders' confidence rose to a near
10-year high in October, with builders upbeat about current sales
conditions and expectations over the next six months.
Single-family building permits slipped 0.3 percent last month.
Multi-family building permits dropped 12.1 percent.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
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