WASHINGTON – U.S. builders started work in August on the most single-family homes in six months and requested permits to construct even more in future months. The figures suggest that housing remains a driver of economic growth despite higher mortgage rates.
The number of single-family homes on which construction began rose 7 percent last month to a seasonally adjusted annual rate of 628,000, the Commerce Department said Wednesday. Thats the fastest rate since February. And builders sought 627,000 permits to construct future single-family homes, 3 percent more than July and the best pace since May 2008.
Overall, builders broke ground last month on houses and apartments at an annual rate of 891,000. Thats up from a rate of 883,000 the previous month. The gain in single-family homes was offset by a decline in volatile demand for apartments.
Total permits fell to a rate of 918,000 from 954,000 in July, also because of a decline in apartments.
Still, several economists said single-family homes represent the bulk of the market. They made up 70 percent of homes started in August. Ted Wieseman of Morgan Stanley said their value is two to three times that of an apartment building.
The fact that the trend in single-family starts and permits continues to improve ... supports our view that construction activity will continue to increase through year end, said Joseph LaVorgna of Deutsche Bank.
Housing starts are 19 percent higher than a year ago. The housing market has been recovering steadily over the past year, helped by lower mortgage rates and steady job growth. The gains have contributed to economic growth at a time when consumers and businesses have spent more cautiously.
But mortgage rates have risen more than a full percentage point since early May. Some economists say higher rates may be starting to slow the recoverys momentum. In July, new-home sales plummeted to the lowest level in nine months.