US housing starts, building permits surge to 12-year high

WASHINGTON: US homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction accelerated, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.

"A prolonged period of lower mortgage rates has perhaps finally encouraged prospective homebuyers to get off the sidelines," said John Pataky, executive vice president at TIAA Bank in Jacksonville, Florida."I'd like to see a couple more months of data like this before I'm convinced the market's fortunes have really changed."

A survey on Tuesday showed confidence among homebuilders rose in September, with builders reporting solid demand for homes. But builders said scarce building lots and labor remained a challenge and also noted that trade tensions, which have undercut manufacturing, were"holding back home construction in some parts of the nation."

Stocks on Wall Street were trading lower after package delivery company FedEx warned that full-year earnings would miss analysts' estimates because of the US-China trade war and the fallout from its split with customer-turned-competitor Amazon.com Inc .August's robust homebuilding performance raised hopes that residential investment would rebound in the third quarter after contracting for six straight quarters, the longest such stretch since the 2007-2009 recession.

Permits to build single-family homes vaulted 4.5 per cent to a rate of 866,000 units last month, the highest since July 2018. Permits, however, continued to lag housing starts, suggesting limited scope for a strong rise in single-family homebuilding in the coming months.

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