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.
The Commerce Department says builders started construction at a seasonally adjusted annual rate of 1.009 million last month, a drop of 2.8% from September when construction had jumped 7.8% to 1.038 million. The weakness last month stemmed from a 15.4% plunge in apartment construction. Construction of single-family homes was up 4.2%, the third gain in the past four months.
Applications for building permits, a good sign of future activity, rose 4.8% in October to 1.08 million.
Economists believe the housing recovery, which had slowed earlier this year, will gain momentum in coming months, helped by stronger job growth.
“The six-month building pace now stands at an even 1,000,000, a level for starts we think could hold for the next few months,” says Nick Exarhos of CIBC WM Economics in a note to analysts. “This morning’s release shouldn’t move markets too much, especially with most participants eagerly awaiting the release of the Fed minutes later this afternoon.”