Washington, DC, United States (4E) – Construction of new homes in the U.S. climbed in August, further sign that the sector continues to grow despite some signs of softening demand.
Housing starts increased 0.9 percent to an 891,000 annual pace in August, compared with the previous month’s 883,000 rate that was slower than previously estimated, according to a Commerce Department report released Wednesday in Washington.
Economists forecast housing starts at 917,000, according to a survey by Bloomberg News. Permits, which offer a snapshot of future projects, fell more than previously estimated.
The increase in last month’s home starts were spurred by the 7 percent rise in construction of single-family homes, which is viewed as a more reliable measure of the health of the housing sector compared with multi-family dwellings, which dropped slightly.
Mortgage rates have risen to their highest levels in more than two years, holding back home construction activity that has driven growth since late 2010. While builders say the slowdown could be temporary, some say it may play a role is the decision of Federal Reserve officials, which are deliberating Wednesday on whether to scale back the central bank’s bond-buying program.
The Fed could make an announcement regarding the pullback after the two-day meeting ends Wednesday.
The average rate for the 30-year fixed-rate mortgage loan was at 4.57 percent last week, according to Freddie Mac’s data. That level is still at historic lows but has increased from the spring, when rates fell below 3.5 percent.