WASHINGTON -- U.S. home construction improved a slight 1.5 percent in October, but groundbreakings for single-family houses fell.
The Commerce Department said Tuesday that housing starts rose to a seasonally adjusted annual rate of 1.23 million, up from 1.21 million in September. The increase was concentrated in the more-volatile multifamily category, including apartment buildings and condominiums, which rose 10.3 percent. Starts for single-family houses slipped 1.8 percent last month.
The housing market has stumbled in recent months as mortgage rates have climbed, putting the ability to buy a home or move up to a nicer property out of reach for more Americans. The increase in mortgage rates has led to a marked decline in home construction since May and a drop of 2.6 percent over the past 12 months.
"The housing construction cycle has peaked, but we're not expecting a meltdown," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Some construction in the South might have been disrupted by Hurricane Florence striking the Carolinas in September and Hurricane Michael hitting Florida and Georgia in October. But overall, groundbreakings recovered somewhat in the South last month, increasing 4.7 percent. They also increased to a five-month high in the Midwest but declined in the West and Northeast.
Homebuilders are feeling slightly less confident, even if they expect to keep building.
The National Association of Home Builders and Wells Fargo housing-market index, released Monday, fell 8 points -- the biggest monthly drop since 2014 -- to 60 points in November. Any reading above 50 points to continued growth.
The average 30-year fixed-rate mortgage has shot up a full percentage point in the past year to 4.94 percent, according to mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp. That benchmark rate is at its highest average since February 2011.
The number of homes under construction rose to 1.14 million, the most since July 2007.
Permits, an indicator of future activity, declined 0.6 percent to an annual rate of 1.26 million.
The pullback in construction starts has occurred as sales of new homes have begun to stall.
New-home purchases have plummeted over the past four months, including a steep 5.5 percent drop in September, according to a Commerce Department report last month. The annual rate of home sales has declined 15.3 percent since May, a reversal from the growth seen during the first five months of 2018.
Information for this article was contributed by Josh Boak of The Associated Press and by Katia Dmitrieva of Bloomberg News.
Business on 11/21/2018