the republic logo

US home construction down 2.8 percent in October, with weakness in volatile apartment building

bug
Share/Save/Bookmark

WASHINGTON — Construction of new homes fell slightly in October after a big surge in the previous month, but the weakness was largely driven by the volatile apartment sector.

Builders started construction at a seasonally adjusted annual rate of 1.009 million last month, the Commerce Department reported Wednesday. That was a drop of 2.8 percent from September when construction had jumped 7.8 percent to 1.038 million.

The weakness stemmed from a 15.4 percent plunge in apartment construction, a category that tends to have big swings from month to month. Construction of single-family homes was up 4.2 percent, the third gain in the past four months.

Applications for building permits, a good sign of future activity, rose 4.8 percent in October to 1.08 million.

While overall construction was down in October, analysts said the weakness was confined to apartment building, which had seen a huge increase in September. They noted upward revisions to overall activity in September and August and forecast further gains in the months ahead.

PHOTO: In this Nov. 4, 2014 photo, construction continues on a boutique apartment building on the southeast corner of Florida Ave. and 14th Street NW, in Washington. Construction of new homes fell slightly in October after a big surge in the previous month, the Commerce Department reported Wednesday, Nov. 19, 2014, but the weakness was largely driven by the volatile apartment sector. (AP Photo/Pablo Martinez Monsivais)
In this Nov. 4, 2014 photo, construction continues on a boutique apartment building on the southeast corner of Florida Ave. and 14th Street NW, in Washington. Construction of new homes fell slightly in October after a big surge in the previous month, the Commerce Department reported Wednesday, Nov. 19, 2014, but the weakness was largely driven by the volatile apartment sector. (AP Photo/Pablo Martinez Monsivais)

"The improving trend should continue, supported by generally low rates ... and strong job growth," said Jennifer Lee, senior economist at BMO Capital Markets.

Showing strength in October was the South, which posted a 10.1 percent jump on construction starts. All other regions of the country recorded declines. Construction fell 18.5 percent in the Midwest, 16.4 percent in the Northeast and 10.9 percent in the West.

Solid employment gains, lower mortgage rates and somewhat easier lending standards are likely to boost housing in coming months. At the same time, economists are concerned about price gains, which so far have been outpacing wage increases.

Price increases have cut into affordability for would-be buyers, limiting sales growth for new homes and cutting into sales for existing homes.

But in an encouraging sign, U.S. homebuilders' confidence rebounded in November as both sales expectations and buyer traffic improved. The National Association of Home Builders/Wells Fargo index rose to 58 this month, up from 54 in October.

That puts the index just short of September's reading of 59, which was the highest level since November 2005, shortly before the housing bubble burst. Readings above 50 indicate more builders view sales conditions as good rather than poor.

Think your friends should see this? Share it with them!

Story copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


We also have more stories about:
(click the phrases to see a list)

Category:

Follow The Republic:

All content copyright ©2014 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.