New-Home Market Surges
Construction on new homes in September rose to its fastest pace in more than four years, the Commerce Department reported Wednesday.
Housing starts surged 15 percent in September over August levels, led by a 25.1 percent rise in the multifamily market. Single-family housing starts increased 11 percent in September, reaching their highest level since August 2008. Building permits, a gauge of future construction, climbed 11.6 percent in September.
“One of the big headwinds for the economy has been the weak housing market, and this indicates that headwind has dissipated,” Gary Thayer, an economic strategist at Wells Fargo Advisors in St. Louis, Mo., told Reuters.
The recovery taking shape in the new-home market is expected to help provide a much-needed lift to the overall economy.
“Things are lining up for housing,” says John Canally, an economist at LPL Financial in Boston. “It’s another step in the right direction, but you still have a long, long way to get back to ‘normal’ in housing.”
While housing starts are showing a strong lift, economists note that the rate is still about 60 percent below what it was in January 2006, when it peaked.