US home building activity picked up in September, indicating the housing market was heating up before the onset of the developing foreclosure crisis.
Commerce Department figures released on Tuesday show that housing starts climbed to a seasonally adjusted annual rate of 610,000 units, the fastest pace reported since April and up .3 percent from an upwardly revised August rate of 608,000. Building permits, meanwhile, fell to their slowest pace in more than 12 months as a downturn in the volatile multifamily sector overshadowed a pickup in single-family applications.
Housing, the industry at the heart of the worst US recession since the Great Depression, appears to be steadying after the lapse in demand which followed the expiration of federal tax credits on April 30th. However, continued high levels of unemployment and depressed home sales mean that any recovery in the market is likely to be slow and steady. Add the recent foreclosure crisis brought on by reports that some of the nation's largest lenders may have used fraudulent or negligent practices to process home seizures and the road to a housing recovery could take years.
The news brought life into the S&P 500's Supercomposite Homebuilding Index, which gained .4 percent on Tuesday in the first half of the trading session. A recent survey conducted by Bloomberg News showed that the median expectation of the 71 economists polled projected an annual rate of 580,000 starts in September. The economists' estimates ranged from 550,000 to 624,000.
Applications for building permits, commonly viewed as an indicator of future construction, fell by 5.6 percent to an annual pace of 539,000 in September. Its the lowest level for the data since April 2009. Applications for permits in the multifamily sector dropped a staggering 20 percent, overshadowing the lime .5 percent rise in single-family permits. The number of permits in the single family sector in September was lower than the number of starts, which gained 4.4 percent from August to an annual pace of 452,000 units, the highest level for the data since May. The boosted level of permits makes it more likely that construction will fall in coming months.
Construction starts on multifamily units, such as condos, townhomes, and apartment buildings, fell 9.7 percent to a seasonally adjusted annual rate of 158,000 after the sector enjoyed a 42 percent jump in starts in August.
Sales have been up-and-down since the April expiration of tax credits extended by the Obama administration to boost sales. Homebuyers had to sign purchase agreements by April 30th and close by June 30th in order to qualify for the tax breaks, though the closing deadline would later be pushed back to September 30th. Sales of newly-constructed homes, after hitting a 19-month high in April, plummeted to a record-low 282,000 annual rate in May.
