Permits for future U.S. home construction rose to their highest level in nearly 5-1/2 years in October, suggesting the housing market recovery remained intact despite recent signs of slowing down.
The Commerce Department said on Tuesday building permits jumped 6.2 percent to a seasonally adjusted annual rate of 1.03 million units. That was the highest rate since June 2008. Permits increased 5.2 percent in September.
August’s permits were revised to a 926,000-unit pace from the previously reported 918,000 units. Permits lead housing starts by at least a month.
The Department postponed the release of housing starts and completions for September and October until Dec. 18 because the collection of data was affected by a 16-day shutdown of the government last month. November data also will be published at that time. The partial shutdown of the federal government also delayed the publishing of the September and October permits reports.
Economists polled by Reuters had expected building permits at a 930,000-unit rate in October.
While permits are not counted in gross domestic product (GDP), they are a key indicator of economic activity and the sturdy gains in both September and October should ease concerns the housing market recovery was stalling.
Higher mortgage rates have slowed the pace of home sales, but demand for accommodation as household formation continues to recover from multi-decade lows is expected to keep residential construction supported.
Home resales fell in October for a second straight month and confidence among single-family home builders has ebbed somewhat since nearing an eight-year high in August.
Permits for the multifamily home sector surged 15.3 percent in October after increasing 20.1 percent in September. Permits for buildings with five units or more reached their highest level since June 2008.
Single-family home permits, the largest segment of the market, increased 0.8 percent after falling 1.9 percent in September.
Enrico Pozzo, Barry Bergner & the SeattlebyDesign Team