- David Berson, chief economist at Nationwide Insurance
US home building activity rose in September, indicating steady job creation and falling interest rates could support construction late this year. Housing starts rose an annualized 6.3% to 1.02 million up from a revised 957,000 recorded in August, the Commerce Department reported. A robust April was followed by declining starts in May and June, before soaring 21% in July to a post-recession peak of a 1.1 million annual rate. Construction has slowly recovered from the trough of the housing crisis, but the pace of starts remains well below the annual average of 1.7 million from 1996 to 2006. Building permits, a proxy of future construction, advanced 1.5% last month to a 1.018 million rate. There is a number of factors supporting a stronger finish to the year for home building. The labour market has created more than 200,000 jobs on average each month this year and the jobless rate dropped to 5.9% in September, the lowest level since 2008. Lower interest rates on mortgages could also boost demand for homes late in the year. The average interest rate on a 30-year mortgage fell to 3.97% this week, the first time rates have declined below 4% in more than a year.
Meanwhile, US consumer sentiment jumped in October to 86.4, the highest level in more than seven years, supported by views on personal finances and the national economy.
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