Rebound in US as new-home builds reach eight-year high
New-home construction in the US rose in July to the highest level in almost eight years, indicating the industry will pick up in the second half of the year.
Residential starts rose 0.2pc to a 1.21m annualised rate, the most since October 2007, from a 1.2m pace in the prior month that was higher than previously estimated, a Commerce Department report showed yesterday in Washington.
The median forecast of 77 economists surveyed by Bloomberg was 1.18m. A drop in permits, a proxy for future construction, signals additional gains will take time to develop.
Rising employment and historically low mortgage rates are enticing buyers, while increasing prices induced by a lack of homes on the market is an incentive to start developments.
Data showing builder sentiment at a decade-high in August underscores the view that the rebound will stay on track even as the Federal Reserve is poised to raise borrowing costs.
"Housing is a good part of the economy right now," Stan Shipley, an economist at Evercore ISI in New York, said before the report. "We have good job growth, good household formation, low interest rates, relatively high consumer confidence. All those feed into housing demand."
Economists' estimates in the Bloomberg survey ranged from 951,000 to 1.28m. The June figure was previously reported as a 1.17m pace.
The labour market remains a mainstay for the rebound. Payrolls grew in July by 215,000 workers following a 231,000 gain in the prior month, and the jobless rate held at a seven-year low of 5.3pc. (Bloomberg)