Housing construction jumped for the second straight month in July to its fastest pace in more than a decade.
Builders started construction of new housing units at a seasonally adjusted annual rate of 1,718,000 units in July, the Commerce Department said Wednesday. Home-building activity has not been heavier since 1987.
The unexpected 5.7 percent increase followed a June rise to a revised 1.63 million units that was even sharper than the department previously reported.
Including July, home building has now stayed above the 1.5 million unit rate for 11 straight months, a stretch unprecedented since the mid-1980s.
The building boom has been fueled by new-home sales, which hit another record high in June.
Home buyers have been plentiful with unemployment at its lowest in decades. And interest rates on fixed-rate 30-year mortgages, which dipped to an average 6.91 percent last week, haven't been much better since 1993.
Economists expected the good news on mortgages to continue after the Federal Reserve on Tuesday decided to leave short-term interest rates unchanged because there are few signs of inflation. The Fed also is waiting to see how much the financial crisis in Asia will slow the U.S. economy.
But July did not bring the slight slowdown analysts were expecting in home building. They predict some layoffs at American factories resulting from the Asian situation will eventually decrease demand.
The National Association of Homebuilders said Tuesday its survey of builders' plans this month showed them to be only a little less optimistic.
Housing permits, a leading indicator of future building plans, bounced back up by 4 percent to a rate of 1.58 million units in July after a 1.7 percent decline in June.
New construction of single-family homes was up 3.0 percent in July, to a seasonally adjusted annual rate of 1.31 million units the best since 1993.
Apartment building starts were up a whopping 15 percent, to 412,000 units.
- Housing starts in the Northeast were up 11.8 percent to 152,000 units.
- In the South, they were up 6.8 percent to 813,000.
- In the West, up 4.3 percent to 436,000 units
- The Midwest had the most modest rise in home building, up 1.9 percent to 317,000 units.
Written by Alice Ann Love