Washington, DC, October 18, 2006--Home builders broke ground on more new homes in September, but took out the fewest building permits in five years, the government said Wednesday.
New construction of homes unexpectedly increased 5.9% in September to a seasonally adjusted annual rate of 1.772 million, the Commerce Department estimated.
It's the first increase in housing starts since May and the highest level since June. Starts are down 18% in the past year.
Building permits, meanwhile, fell 6.3% to a five-year low of 1.619 million annualized. Permits have fallen eight months in a row and are off 28% in the past year. Permits are considered a leading indicator not only of housing but of the economy as a whole.
Starts were much stronger than expected, but permits were much weaker.
Economists were expecting housing starts to fall about 2% to 1.64 million annualized. They expected permits to fall about 2% to 1.70 million.
August's rate of housing starts was revised higher to 1.674 million from 1.665 million previously reported. Permits were revised slightly higher in August to 1.727 million from 1.722 million.
Starts of single-family homes rose 4.3% to a seasonally adjusted annual rate of 1.43 million, while permits for single-family homes fell 6% to 1.21 million, the lowest since October 2001.
The NAHB reported on Monday that its survey of builder sentiment rose for the first time in October after eight straight declines, saying the market may be "stabilizing" at a very low level.
The government's housing data are subject to large sampling and other statistical errors. It can take five months for a new trend in housing starts to emerge from the data. The standard errors are so high, in fact, that it is not certain that housing starts rose or fell in September.
In the past five months, housing starts have averaged 1.80 million, down from 1.81 million in the five months ending in August and 2.12 million in January.
