HOUSING starts in America rose by 3.6% to 894,000 in October, the highest in over four years, according to the Commerce Department. The rise in residential construction was widely unexpected; forecasters thought starts would fall after the 15% surge in September. New home building in the West increased by over 70% on a year earlier. Single-family home starts fell slightly in October, but were up by 10% for buildings with five or more units. Homebuilding could add to GDP growth this year for the first time since 2005. Building permits (another leading indicator of consumer demand) in October were almost 30% higher than a year earlier—though were down by 2.7% on the previous month. Housing starts however, are still 40% below their peak in early 2007. And while home-builders’ confidence has risen for the seventh consecutive month (to its highest since mid-2006), the index’s reading of 46 is below 50, indicating more homebuilders view sales conditions as “poor” than “good”. New and existing home sales have been climbing slowly, helped by record low mortgage rates, but America’s housing market recovery still has a long way to go.
graphic details of economist.com