U.S. housing starts unexpectedly fell in October, but a jump in permits to near a 6-1/2-year high suggested the housing market was steadily regaining strength.
Groundbreaking slipped 2.8 percent to a seasonally adjusted annual1.009 million-unit pace, the Commerce Department said on Wednesday. September’s starts were revised up to a 1.038 million-unit rate.
Economists polled by Reuters had forecast starts rising to a 1.025-million unit rate from September’s previously reported 1.017-million unit pace.
The volatile multifamily homes segment accounted for the decline inhousing starts last month. Starts for single-family homes, the largestpart of the market, rose for a second straight month to their highestlevel in nearly a year, a good omen for housing.
While residential construction, home builder sentiment and sales havebeen trending higher in recent months, sluggish wage growth andstringent lending practices by financial institutions continue to constrain activity.
Still, home building is expected to contribute to gross domestic product in the fourth quarter after being neutral in the July-September period.
Starts for single-family homes increased 4.2 percent last month to a696,000-unit pace, the highest since November of last year.Multifamily homes starts fell 15.4 percent to a 313,000-unit rate inOctober.
Last month, permits jumped 4.8 percent to a 1.080 million-unit pace,the highest since June 2008. It was the second straight month of gainsin permits, which lead starts.
Permits for single-family homes rose 1.4 percent to a 640,000-unitpace. Permits for multi-family housing surged 10 percent to a 440,000-unit pace.