WASHINGTON- US single-family homebuilding raced to a more than 13-year high in September, cementing the housing market’s status as the star of the economic recovery amid record-low mortgage rates and a migration to the suburbs and low-density areas in search of more room for home offices and schooling.
The report from the Commerce Department on Tuesday also showed building permits and housing completions scaling levels last seen in 2007.
That could help to ease an acute shortage of homes for sale, which has fueled house price inflation.
The data reinforced expectations that the economy rebounded sharply in the third quarter after suffering its deepest contraction in at least 73 years in the second quarter. But the recovery from the COVID-19 recession has entered a period of uncertainty, with fiscal stimulus depleted.
“It appears the strength in housing is being driven by the first-time home buyer coming off the sidelines and taking advantage of historically low mortgage rates along with the opportunity to purchase a home in a location they might not otherwise consider outside of the current work-from-home environment,” said Scott Volling, principal at PwC in Atlanta.
Single-family homebuilding, the largest share of the housing market, jumped 8.5 percent to a seasonally adjusted annual rate of 1.108 million units last month, the highest level since June 2007. That offset a 16.3 percent decline in starts for the volatile multi-family segment to a pace of 307,000 units.
Overall, housing starts increased 1.9 percent to a rate of 1.415 million units last month. Groundbreaking activity rose in the West, South and Northeast, but fell in the Midwest.
Economists polled by Reuters had forecast starts increasing to a rate of 1.457 million units in September.
Homebuilding advanced 11.1 percent year-on-year, with singlefamily starts surging 22.3 percent.
Further gains in single-family home construction are likely, with building permits shooting up 7.8 percent to a rate of 1.119 million units last month, the highest level since March 2007.
Builders are taking advantage of the strong demand, lean inventories and low mortgage rates to ramp-up construction. A survey on Monday showed confidence among single-family homebuilders hit a record high in October.
But builders said constructing affordable homes was becoming increasingly challenging because “shortages of lots, labor, lumber and other key building materials are lengthening construction times.”
The PHLX housing index .HGX was trading higher, outperforming a broadly firmer US stock market.
The dollar dipped versus a basket of currencies. US Treasury prices fell.