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Post-hurricane rebuilding fuels jump in October US home construction

Nov 19 2017 11:45

Washington - Construction of new homes in the United States sprang to life in October as hurricane-damaged housing markets recovered from back-to-back late summer storms.

The spike in construction, which also reflected a large increase in apartments in regions not touched by Hurricanes Harvey and Irma, was the biggest in a year and followed three consecutive months of declines, the Commerce Department reported.

Analysts say supply in the tight US housing market has failed to keep pace with demand and it remained unclear whether the October bounce could be sustained once the storm effects recede.

Housing starts rose 13.7% to a seasonally adjusted annual rate of 1.29 million units, the largest increase and the highest level since October 2016. The result far overshot analyst expectations, which had called for a more modest 5.6% increase.

The sudden jump followed months in which construction slowed and last month's pace was still 5.3% below the rate recorded in October of last year.

And Ian Shepherdson of Pantheon Macroeconomics said the October jump might be noise from the hurricanes.

"It would still be a real stretch to argue that the trend is rising," he wrote in a client note. "All we can say for sure is the hurricane hit has reversed."

Construction of apartments surged 37.4%, the largest increase since December, driven in large part by new construction in the Northeast. In that region homebuilding shot up by 44.2%, while single-family homes saw a 22.4% drop.

In the South, which includes flooded and storm-battered southeast Texas and Florida, single-family home construction rose 16.6%, its fastest pace in more than three years.

Building permits, which are a sign of construction in the works, gained a less robust 5.9% compared to September, reaching an annual rate of 1.29 million units, the highest level since January.

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