WASHINGTON (Reuters) - U.S. homebuilding jumped to a one-year high in October as disruptions caused by recent hurricanes in the South faded and communities in the region started replacing houses damaged by flooding.
The sharp rebound in home construction reported by the Commerce Department on Friday was also driven by robust gains in the Northeast and Midwest regions.
The broad recovery could ease concerns about the housing market, which has been a drag on economic growth since the second quarter. The report added to labor market, manufacturing and retail sales data that have pointed to strong economic momentum as the year winds down.
“Homebuilders are building and that signals greater confidence in the economy ahead,” said Chris Rupkey, chief economist at MUFG in New York. “Housing construction has been the missing link in the puzzle over why investment spending has lagged in this recovery.”
Housing starts surged 13.7 percent to a seasonally adjusted annual rate of 1.29 million units. That was the highest level since October 2016 and also the second-best reading in 10 years. September’s sales pace was revised up to 1.135 million units from the previously reported 1.127 million units.
Groundbreaking activity in the South, which accounts for almost half of U.S. residential construction, plummeted in the aftermath of Hurricanes Harvey and Irma. The storms slammed Texas and Florida in late August and early September.
Economists polled by Reuters had forecast housing starts rising to a pace of 1.185 million units last month.
The PHLX housing index was 0.5 percent higher, bucking a broadly weaker U.S. stock market. Shares in the nation’s largest homebuilder, D.R. Horton, rose 0.6 percent and Lennar Corp gained 0.5 percent. Pultegroup shares increased 0.4 percent.
Prices of longer-dated U.S. Treasuries were trading higher, while the dollar was weaker against a basket of currencies.
HOMEBUILDER CONFIDENCE HIGH
Housing starts in the South soared 17.2 percent in October to 621,000 units, with single-family construction vaulting 16.6 percent to its highest level since 2007. There were also increases in homebuilding in the Midwest and Northeast.
U.S. housing starts soar to 1-year high
November 17, 2017 by Leave a Comment