The rate of housing starts in September surged 15 percent to its highest point since July 2008, according to data released Wednesday by the U.S. Department of Commerce.
Starts for all privately owned housing—including single-family and multi-family units—reached an adjusted annual rate of 872,000 units, up from August's rate of 758,000. What's more, the most recent rate is 34.8 percent higher than the September 2011 rate of 647,000. The surge was led by a strong increase in single-family home building, which climbed 11 percent in September to 603,000 from the August figure of 543,000.
According to Reuters, the Commerce Department's announcement exceeded expectations of economists surveyed by Bloomberg. The median estimate of 81 economists surveyed by Bloomberg called for 770,000. A dwindling supply, record-low mortgage rates and population growth all contributed to September's surge.
“The housing market certainly has turned,” Brian Jones, a senior economist at Societe Generale in New York whose forecast for 790,000 starts was among the highest, told Reuters. “But we still have a long way to go. The good thing is that construction will pull employment with it.”
"Builders are responding to the rising demand for new homes as consumers begin to feel more confident about their local markets and put back into motion purchasing plans that were on hold during the recession," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "Yet, while September's surge in activity is certainly encouraging, we need to remember that we still have a long way to go back to a fully functioning market—and in order to get there, significant challenges must still be addressed in terms of credit availability and appraisal issues, as well as the increasing cost of building homes due to rising materials prices and a declining inventory of buildable lots."
"Today's strong report corresponds with the significant gains we've seen in builder confidence over the past year, and confirms our view that a housing recovery is solidly underway in a growing number of markets nationwide," said NAHB Chief Economist David Crowe. "That said, we are now almost at the half-way mark in terms of what would be considered a normal amount of new-home construction in a healthy economy, and we need to see consistent improvement like this over an extended period to get back to where the market should be in terms of generating jobs and economic growth."
According to the Commerce Department, combined single- and multifamily starts rose in all but one region of the country in September, with a 6.7 percent gain in the Midwest, a 19.9 percent gain in the South and a 20.1 percent gain in the West. Starts declined 5.1 percent in the Northeast.
