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Housing starts in the U.S. surged 15 percent in September to the highest level in four years, adding to signs of a revival in the industry at the heart of the financial crisis.
Beginning home construction jumped last month to an 872,000 annual rate, the fastest since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, Commerce Department figures showed last week in Washington. An increase in building permits may mean the gains will be sustained.
“It’s no longer a question of whether the industry is rebounding,” Larry Sorsby, chief financial officer of Red Bank, N.J.-based Hovnanian Enterprises Inc., the best-performing home-building stock this year, said in a telephone interview. “There is clear evidence that we have bounced off the bottom and are in the midst of a recovery.”
Sales gains stoked by record-low mortgage rates, dwindling supply and population growth indicate construction by builders like Meritage Homes Corp. and Lennar Corp. can continue strengthening and contribute to economic growth. Improving demand may also help revive a part of the job market that’s seen construction employment fall by almost 2 million since the end of 2007.
The jump in U.S. housing starts is the latest sign that the world’s largest economy is gaining strength after growth slowed to a 1.3 percent annual pace in the third quarter. Gains in retail sales and industrial production in September both exceeded economists’ forecasts.
The median housing starts projection in the Bloomberg survey called for a 770,000 pace, and estimates ranged from 735,000 to 800,000. The prior month was revised up to 758,000 from a previously reported 750,000 pace.