U.S. home building surged to highs it hasn't seen in more than a decade during August, as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.
Figures released Wednesday by the U.S. Commerce Department indicated housing starts jumped 12.3% to a seasonally-adjusted annual rate of 1.364 million units last month, the highest level since June 2007. Data for July was revised to show home building falling to a pace of 1.215 million units, instead of decreasing at a rate of 1.191 million units as previously reported.
Economists had forecast housing starts would advance to a pace of 1.250 million units in August. Building permits increased 7.7% to a rate of 1.419 million units in August, the highest level since May 2007.
Housing starts rose 6.6% on a year-on-year basis in August.
The housing market, the sector most sensitive to interest rates, had until now shown few signs of benefiting from the Federal Reserve’s monetary policy easing, which has pushed down mortgage rates from last year’s multi-year highs.
The Fed is out with another interest rate decision Wednesday afternoon, and the smart money forecasts another quarter-percentage-point drop.
