New-home construction climbed to a nine-year high last month on the back of a big jump in apartment developments and strong growth in single-family housing.
Residential starts jumped 25.5 percent in October to 1.32 million seasonally adjusted units, the most new construction starts since August 2007, according to a U.S. Commerce Department report released Thursday.
The increase from September was the largest on record since July 1982, Bloomberg News reported. Multifamily building construction spiked an astounding 68.8 percent. Single-family homebuilding rose 10.7 percent.
Job growth and stronger finances have been driving demand, but increases in borrowing costs could discourage first-time buyers.
“Homebuilding is in a steady recovery,” said Richard Moody, chief economist at Regions Financial Corp. in Alabama. “The fundamentals for demand are in good shape” although “higher mortgage rates could be a potential headwind if we see further gains in rates.”
Investors are expecting quicker expansion and inflation from President-elect Donald Trump. That’s pushed the yield on the U.S. 10-year note to jump in the past week, and indicator of changes in mortgage rates.