- David Crowe, chief economist for the homebuilders' association
The number of US housing starts surprisingly rose in September, while building permits dropped more than expected. According to the Commerce Department, housing starts surged 6.5% to a seasonally adjusted 1.206 million units in September, following the previous month's total of 1.132 million units. Analysts, however, had predicted a figure of 1.140 million. At the same time, the number of building permits issued in September plunged 5.0% to a seasonally adjusted 1.103 million units, compared with August's 1.170 million. A strong increase in employment over the past year, coupled with very low mortgage rates and gradually easing lending standards, have underpinned demand for new dwellings.
In addition to that, builder confidence climbed to the highest level un ten years in October, according to the National Association of Home Builders. The builder sentiment index rose to 64 points, up from 61 last month. Readings above the 50-threshold indicate more builders view sales conditions as favourable rather than poor. The index has been consistently above 50 since July last year. Builders' upbeat mood bodes well for a pickup in new home construction, which could support the overall economy.
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