Ahead of the Bell: US Housing Starts
WASHINGTON (AP) — Builders likely started construction on more homes in September than August, as many gained confidence in their prospects for sales in the coming months.
Economists expect that builders broke ground on homes and apartments at a seasonally adjusted annual rate of 770,000 in September. If the forecast is correct, that would be the fastest pace since October 2008.
The Commerce Department will release the report at 8:30 a.m. EDT Wednesday.
In August, construction of single-family homes rose to the highest level in more than two years. Apartment construction, which can be volatile from month to month, fell 4.9 percent.
Applications for building permits, a good sign of future construction, also declined to an annual rate of 803,000. Still, that's down from a four-year high of 811,000 in July.
Construction of single-family homes and apartments has risen nearly 60 percent since hitting a recession low in April 2009. It's still half the pace considered healthy. But the steady gains suggest the housing recovery could endure.
Builder confidence is at a six-year high, according to a survey by the National Association of Home Builders. The group's index of builder sentiment rose to a reading of 41 this month. While that's still below the level of 50 that signals a healthy market, it has steadily climbed over the past year from a reading of 17.
Sales of new and previously owned homes have been slowly improving this year, and home prices are starting to show consistent gains.
Record-low mortgage have encouraged more people to buy. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.
Housing is expected to keep improving next year. But many economists say economic growth will stay muted until companies step up hiring and consumers start spending more.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.