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IPFS News Link • Housing

Housing Starts in U.S. Fall in Sign of Slow, Steady Recovery

• http://www.bloomberg.com

New-home construction in the U.S. fell in August, indicating the real-estate recovery will take time to evolve.

Residential starts declined 3 percent to a 1.13 million annualized rate from a 1.16 million pace the prior month that was slower than previously estimated, a Commerce Department report showed Thursday in Washington. The median forecast of 81 economists surveyed by Bloomberg was 1.16 million.

Steady job gains and mortgage rates holding at historical lows are attracting more Americans to the real-estate market even as wage growth remains tepid. Permits to build single-family houses climbed last month to the highest level in seven years, signaling builders remain confident even as the Federal Reserve is poised to raise interest rates this year.

"The housing recovery will continue to be bumpy, but we expect it to continue." said Michelle Meyer, deputy head of U.S. economics at Bank of America Corp. in New York. "The labor market has improved, the economy has improved and we're seeing pent-up demand for housing. So the backdrop is very supportive."

Economist estimates in the Bloomberg survey ranged from 1.08 million to 1.25 million. The July figure was previously reported as a 1.21 million pace.

Permits, a proxy for future construction, climbed 3.5 percent to a 1.17 million annualized rate, indicating starts could edge up this month. They were projected to rise to a 1.16 million rate after 1.13 million the prior month, according to the survey median.

Single-Family Permits

Applications to begin work on single-family houses, the largest and most economically significant part of the market, climbed to a 699,000 rate, the highest since January 2008.

Single-family starts fell 3 percent last month to a 739,000 rate from a seven-year high of 762,000 in July.


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