Washington, DC, Oct. 17—Ground breaking for new homes jumped 13.3% to a seasonally adjusted annual rate of 1.843 million units last month—the highest level since June 1986— from an upwardly revised 1.627 million rate in August. It was the biggest monthly increase since a 14.1% climb in July 1995.
Single family home starts hit their highest rate since November 1978. According to the Commerce Department, the surge was due to a draw down of the August single family inventory of housing that had been authorized but not started.
"Housing starts are extremely strong, just through the roof. They are not consistent with fears of a double-dip recession, and add to the case for the Fed remaining on the sidelines through November and December," said Sean Callow, a foreign exchange analyst for IdeaGlobal in New York.
Building permits, an indication of builder confidence and a gauge of future strength, rose 3.7% to 1.727 million units from 1.666 million units the preceding month.
The starts far exceeded the expectations of analysts, who had forecast a 1.636 million level. September''s sudden upswing comes after three months of consecutive declines.
Single family housing starts, the biggest category of building, rose to a 1.477 million unit annual rate, a level not seen since the administration of President Jimmy Carter. Multifamily starts fell 4.4%.
The housing market has fared well through both the U.S. economic downturn and the slow recovery, producing record levels of sales and mortgage lending as interest rates on the popular 30 year fixed rate mortgage dropped to lows unseen since the mid 1960s.
