Washington, DC, Nov. 19--Home-building activity sizzled in October as residential construction hit its highest level in 17 years.
Housing starts shot up 2.9% to a seasonally adjusted annual rate of 1.960 million units, the Commerce Department reported Wednesday. That followed an upwardly revised increase of 4.0% in September to a rate of 1.905 million units.
October's performance, the best since January 1986, caught economists off guard. A consensus estimate called for a drop of 2% to an annual pace of 1.850 million units, according to a survey by Dow Jones Newswires and CNBC.
The housing sector has repeatedly defied economists' expectations, remaining strong in the last few years as the rest of the economy slipped into recession and struggled to recover. Near record-low mortgage rates have continued to fuel the sector, which, in turn, has lent strength to the economy's fledgling recovery.
All of the sector's vigor last month came from new single-family home projects, which surged 5.7% to a record annual rate of 1.62 million units. Meanwhile, construction of apartments, condominiums and other multifamily housing dropped 3% to a rate of 319,000 units.
On a regional basis, home-building activity dropped 19% in the Northeast, reflecting a seasonal decline. New activity also declined in the Midwest, while the West saw an 18% jump in activity. The South also saw an increase.
Overall starts were up 18.6% from a year earlier, when economists were forecasting that the sector would start to cool.
Building permits, an indicator of future building activity, soared 5.2% to a 1.973 million annual rate.
