US home construction hits highest level since 2007 after 12% surge

Mark Blinch/Reuters
  • US residential construction hit its highest level since July 2007 last month amid double-digit growth for the industry.
  • Residential starts hit a 1.36 million annualized rate in August, according to the US Census Bureau. The median estimate from a Bloomberg survey was 1.25 million starts.
  • Housing starts are among the most-watched economic indicators in the US, as homes are often consumers’ biggest purchases. A slowdown in residential construction could signal economic uncertainty among construction businesses and homebuyers.
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US housing starts leaped in August to the highest level since July 2007, climbing on increased apartment and single-family home construction.

Residential construction jumped 12.3% in August, according to data from the US Census Bureau and the Department of Housing and Urban Development, hitting a 1.36 million annualized rate of housing starts.

The figure beat all estimates compiled by Bloomberg. The median estimate was a 1.25 million annualized rate.

Low mortgage rates and a strong job market are likely primary drivers behind the surge. The double-digit jump could signal a breakout from months of slowing growth in the residential construction industry.

However, the continued US-China trade war and recession warnings could keep contractors and homebuyers from maintaining the steady growth.

Housing starts are among the most-watched economic indicators in the US. Homes are often consumers’ biggest purchases, and a slowdown in house construction often collective economic uncertainty in consumers and homebuilders.

Read more: MORGAN STANLEY: The stock market just shifted by a magnitude that usually precedes recessions. Here’s why it’s an ominous sign once again.

The upward trend follows “softness” from earlier in the year subsides, JPMorgan economist Daniel Silver said in a note. The report’s positive guidance suggests home starts will continue despite other signs of economic slowdown, he added.

“The starts and permits data are leading indicators regarding residential construction so the recent strength in the data signals that related construction will pick up in the coming months,” Silver said.

The Census Bureau reports the latest residential construction data on the 12th workday of each month, at 8:30 a.m. ET.


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