Home Building in US Rebounds after 2 Months of Decline

Published By : 21 Oct 2015 | Published By : QYRESEARCH

The home building sector in the United States presented a rebound in September following two consecutive months of declines mainly owing to a sharp gain in the construction of multifamily housing and apartments. 

Housing starts increased at 6.5 per cent from the previous month to reach a seasonally adjusted yearly rate of 1.21 million last month, according to the Commerce Department on Tuesday. The increase was led by a surge of 18.3 per cent in multifamily units, which comprises condominiums and apartments. Starts of single family houses barely moved, increasing at a mere 0.3 per cent. These homes account for almost two thirds of the overall housing market in the United States.

The most recent readings indicate that the country’s housing sector is firming despite the fact that it is still subdued when compared to historical standards. 

Chief economist at Amherst Pierpont Securities Stephen Stanley told clients in a note that the underlying story is that the demand for housing is rather strong and builders are surely stepping up their groundbreaking to meet the growing need, albeit at a slow pace. 

Builders are certain that home purchasers will come back to the housing market, attracted by higher rental costs, an enhanced job market, and ongoing low rates of interest from the Federal Reserve. However, a short supply in certain areas, in addition to wages that have been rather slow to increase, might be curbing purchases. At the same time, shortage of labor is making it difficult to get homes off the ground. 

New home sales went up in the months of July and August even though the sales have still not reached their pre-recession standards. However, sales of existing homes dropped in August possibly owing to increasing prices. 

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