Homebuilding surged in October in tandem with confidence in the sector reaching a new high.
Housing starts jumped 4.9 percent to 1.5 million, seasonally adjusted, compared to 1.4 million logged in September by the Census Bureau’s monthly report on residential construction. October’s figures were up 14 percent year-over-year, underscoring the strength of the housing market this year.
But the swell of demand from homebuyers may be starting to trail off. In September, the number of new and pending home sales dipped, both of which could indicate a coming drop in sales. Mortgage applications had a seven-week slump that broke last week, according to the Mortgage Bankers Association.
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Joel Kan, MBA’s head of industry forecasting, noted that the increase in housing starts was driven by single-family home construction, which he said is at its highest level since 2007.
He expected the wave of new homes to provide “sufficient inventory” to speed up the pace of sales. There have been a dearth of homes on the market and prices have risen accordingly.
But that may take some time to play out. The number of housing completions last month dropped 4.5 percent to an adjusted 1.3 million units, compared to September’s 1.4 million, according to the Census report. That still beat last year’s completions during the same period by 69,000 units.
The report also reflects the number of homes in the early phases of development. Building permits were issued for an adjusted 1.5 million housing units last month, which is on par with September’s numbers — but it was a nearly 3 percent increase compared to the same time last year.