U.S. Housing Starts Increased More Than Forecast in October

U.S. new home construction rose in October by more than forecast to the fastest pace since February, highlighting a robust residential real estate market that’s helping spur the economy.

Residential starts increased 4.9% to a 1.53 million annualized rate from an upwardly revised 1.46 million a month earlier, according to a government report released Wednesday. The median forecast in a Bloomberg survey of economists called for a 1.46 million pace.

U.S. single-family home starts hit fastest pace since 2007, backlogs stay high

Record-low mortgage rates and the rush to relocate to larger homes in suburbs that double as new workplaces during the pandemic have depleted housing inventory, helping explain why builder confidence stands at an all-time high. Starts of single-family homes jumped to the best pace since 2007 and the number of units authorized but not yet started remained elevated, suggesting construction will remain strong in coming months.

“Unless demand suddenly sinks, builders will be playing catch-up for the foreseeable future,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a note. “Still, the implication for GDP is quite positive, as the housing sector is likely to post an explosive gain in the fourth quarter and continue to rise next year.”