Oct. home construction slumps on fewer apartment buildings

Many analysts see the housing market as expanding despite recent gyrations

By Josh Boak
AP Economics Writer

WASHINGTON (AP) — Apartment construction plunged sharply in October, as the pace of homebuilding slipped amid a broader cooling of the real estate market.

Housing starts — both houses and apartments— fell last month 11 percent to a seasonally adjusted annual rate of 1.06 million homes, the Commerce Department said Wednesday.

Single-family house construction declined 2.4 percent. Last month’s drop mostly stemmed from a 25.5 percent slide in the volatile multi-family category that includes apartments, a sector had posted a sharp increase in September. The government also revised downward overall housing starts in September and August.

But many analysts see the housing market as expanding despite the recent gyrations.

“The trend here is still up nicely from last year,” said Stephen Phillips, president of Berkshire Hathaway HomeServices, who added that the housing starts data is “one of the most volatile and often revised statistics we see in the industry.”

Home construction has climbed 10 percent year-to-date as solid levels of hiring have improved consumer confidence and encouraged more people to buy houses or move to new apartment complexes.

The additional construction marked a turnaround for a real estate sector that had been among the weakest pieces of the recovery from the Great Recession.

Yet the market’s upward trajectory now shows some signs of possibly stalling as rising prices, tight inventories and the economic uncertainty reflected in the stock market have sidelined many would-be buyers and renters.

Building permits rose 4.1 percent in October to an annual rate of 1.15 million after falling in September. The rebound last month suggests that apartment construction, which accounted for the majority of the increase, could swing upward in the coming months as more Americans have turned to renting.

The percentage of Americans who own homes has fallen to nearly a 48-year low of 63.7 percent.

The growth in home sales enjoyed this year appears unsustainable without significant income growth.
 

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