New residential construction in the U.S. unexpectedly increased in the month of October, according to a report released by the Commerce Department on Friday.<\/p>\n
The report said housing starts jumped by 1.9 percent to an annual rate of 1.372 million in October after surging by 3.1 percent to a downwardly revised rate of 1.346 million in September.<\/p>\n
Economists had expected housing starts to dip to a rate of 1.350 million from the 1.358 million originally reported for the previous month.<\/p>\n
The unexpected increase came amid a spike in multi-family housing starts, which soared by 6.4 percent to an annual rate of 402,000.<\/p>\n
Meanwhile, the report said single-family housing starts crept up by 0.2 percent to an annual rate of 970,000 after surging in the previous month.<\/p>\n
“Home construction was again resilient in October as the extreme shortage of housing supply has kept demand for new builds solid,” said Nationwide Senior Economist Ben Ayers.<\/p>\n
He added, “This dynamic could linger into 2024 even with mortgage rates near the highest since 2000, especially if builders continue to offer rate buydown incentives.” <\/p>\n
The Commerce Department said building permits also shot up by 1.1 percent to an annual rate of 1.487 million in October after plunging by 4.5 percent to a revised rate of 1.471 million in September.<\/p>\n
Building permits, an indicator of future housing demand, were expected to decrease to a rate of 1.450 million from the 1.475 million originally reported for the previous month.<\/p>\n
Multi-family permits jumped by 2.2 percent to an annual rate of 519,000, while single-family permits rose by 0.5 percent to an annual rate of 968,000.<\/p>\n
The National Association of Home Builders released a separate report on Thursday unexpectedly showing a continued deterioration in U.S. homebuilder confidence in the month of November.<\/p>\n
The report said the NAHB\/Wells Fargo Housing Market Index slumped to 34 in November from 40 in October, while economists had expected the index to come in unchanged.<\/p>\n
The housing market index decreased for the fourth consecutive month, falling to its lowest level since hitting 31 in December 2022.<\/p>\n
“The rise in starts runs counter to worsening survey data from builders who expressed concerns that new home sale could fade in coming months,” said Nationwide’s Ayers. “This suggests that building activity could decline over the winter, especially with loan rates for builders continuing to rise.” <\/p>\n