New housing construction rose in August, boosted by the strongest pace of single-family home starts in more than two years that shows an improving U.S. real estate market.
Beginning construction climbed 2.3 percent to a 750,000 annual rate, less than forecast and restrained by a drop in the building of apartments, from a revised 733,000 annual pace in July, Commerce Department figures showed today in Washington. The median estimate of 85 economists surveyed by Bloomberg called for 767,000. Building permits cooled.
Mortgage rates near all-time lows and cheaper properties are driving sales at companies like Toll Brothers Inc. and propelling construction, one of the economy’s few sources of strength. Tighter credit standards and unemployment above 8 percent for the last three years are hurdles for the industry.
“The residential construction industry continues to improve through year-end on low housing inventories and rising demand,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Home sales are improving slightly and low mortgage rates certainly make housing far more affordable.”
Estimates in the Bloomberg survey for housing starts ranged from 740,000 to 800,000. The prior month was revised down from a previously reported 746,000 pace.
Stock-index futures maintained gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in December rising 0.2 percent to 1,455.3 at 8:59 a.m. in New York.
Construction of single-family houses climbed 5.5 percent to a 535,000 rate, the fastest since April 2010. Permits for the building of one-family homes increased 0.2 percent to a 512,000 annual pace, the highest since March 2010.
Work on apartments and other multifamily homes dropped 4.9 percent to an annual rate of 215,000.
Two of four regions showed an increase in total housing starts, reflecting a 21 percent surge in the Midwest and a 3.7 percent gain in the South.
Confidence among construction company leaders is the highest in more than six years. The National Association of Home Builders/Wells Fargo index of builder confidence jumped in September to 40, the strongest since June 2006, from 37 a month earlier, group said yesterday.