U.S. home construction unexpectedly accelerated in July to the fastest pace in five months, indicating the housing industry remains an area of support for the economy, Bloomberg reports.
Residential starts increased 2.1% to a 1.21 million annualized rate, exceeding all forecasts in a Bloomberg survey, from 1.18 million in June, Commerce Department data shows. Permits, a proxy for future construction, were little changed.
Builders are responding to the strongest home sales since the start of the economic expansion, made possible by robust hiring and cheap financing. More houses were under construction last month than at any time since the beginning of 2008, indicating homebuilders were making headway in filling orders.
“Job growth is still the key driving indicator, but it’s still also low mortgage rates, as well as lending standards that are a bit easier in residential as a whole,” Anika Khan, a senior economist at Wells Fargo Securities LLC in New York, tells Bloomberg. “The fundamentals look sound for the housing market.”
The pace of housing starts is the second-fastest of the expansion behind the 1.21 million in both February and June 2015. The median forecast in a Bloomberg survey called for a 1.18 million rate. Estimates ranged from 1.11 million to 1.2 million.
