Dow Jones Newswires
Demand in the United States for housing permits surged in October to the highest level in more than five years, a sign US home construction could gain traction as the year ends.
The number of building permits issued in October rose 6.2 per cent from a month earlier to a seasonally adjusted annual rate of 1.034 million, after rising by 5.2 per cent in September, the Commerce Department said Tuesday. October's pace was the strongest since June 2008, during the last recession.
Economists surveyed by Dow Jones expected permits for October would rise to a 930,000 pace. Permits are considered an indication of future construction. Year over year, the pace of issued permits was up 13.9 per cent in October.
The Commerce Department did not release figures for the more closely watched housing starts because "accurate data" couldn't be collected in time, according to the Census Bureau, a division of the Commerce Department. That was due to the partial government shutdown in October. The closure also meant permit figures for September and October were released simultaneously.
Full residential construction data for September, October and November will be released on Dec. 18, the department said.
Economists forecast housing starts would have risen to an annualized rate of 910,000 in September and then to 915,000 in October, according to a survey conducted by Dow Jones.
"Industry sources suggest that builders are finally beginning to stir a bit, hoping to get some new houses built in time for the spring selling season next year," said Pierpont Securities chief economist Stephen Stanley in a note ahead of the release.
Tuesday's partial report showed strength for a sector that has been a key driver of the recovery. But rising mortgage rates and home prices in recent months have stifled affordability and weakened the industry.
Last week, home builders said they were feeling less confident about the housing market in November than they were over the summer, according to a survey by the National Association of Home Builders. People are showing interest in purchasing new homes, but rising costs are holding them back, the industry trade group said.
On Monday, the National Association of Realtors said its pending-home sales index, which measures contract signings, fell for the fifth straight month in October to the lowest level in nearly a year. Last week, the Realtors trade group said its measure of closed transactions--sales of previously owned homes--fell for the second consecutive month in October.
The average rate on a 30-year fixed-rate mortgage was 4.22 per cent last week, up from 3.35 per cent in May, according to Freddie Mac.