Housing starts increased 3.6 percent from September to October to a seasonally adjusted annual rate of 894,000, the highest since July 2008, the US Department of Commerce reported today. Residential starts are up 41.9 percent from the same month last year.
The figure exceeded the expectations of economists, who had anticipated a lower rate of 840,000 given Hurricane Sandy’s impact on the East Coast, according to Reuters.
However, Sandy had only a slight effect since it struck a relatively small part of the US at the end of October, government analysts said. By area, October starts fell by 6.5 percent in the Northeast and 2.5 percent in the South, while ticking up 8.9 percent in the Midwest and 17.2 percent in the West.
“The broad improvement in home prices, home equity, starts, and inventory clearing are key developments that position the economy for stronger growth next year, and beyond,” said Eric Green, chief economist at TD Securities in New York.
Experts attribute surging home sales, prices and building to pent-up demand and record low mortgage rates. Home construction is predicted to contribute to gross domestic product growth this year for the first time since 2005, before the recession. Homebuilding occupies about 2.5 percent of GDP but allegedly generates at least three new jobs for every new house created.