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September Housing Starts Set Four-Year High

Construction starts and permits for single-family residences gained 11.0 and 6.7 percent respectively in September over the month prior, fueling strong overall gains. Single-unit and multi-unit housing starts combined for the best month in that category since July 2008.

Housing starts and building permits surged past economist’s predictions in September, brightening hopes for the housing market and the industries that depend on it.

Census data shows September housing starts were at a seasonally adjusted annual rate (SAAR) of 872,000 units, a 15 percent jump from the revised August estimate of 758,000 and 34.8 percent above the 647,000 rate set in September 2011. The new rate, released October 17, is the highest since July 2008.

Building permits also made strong gains, with an SAAR of 894,000, 11.6 percent above the revised August rate of 801,000 and 45.1 percent above the September 2011 estimate of 616,000. The comparable growth in both starts and building permits indicates that the growth the market has showed this year is sustainable and should continue.

“This is good news for the labor market,” Anika Khan, a senior economic analyst for Wells Fargo, told Bloomberg. If single-family starts “continue to show this positive momentum, and we expect they will, we’ll likely start to see some construction jobs come back.”

Despite 5,000 net new jobs, construction unemployment was at 11.9 percent in September, and the industry has shed 2.2 million jobs since the housing bust. Though the housing market still has a long way to go before reaching nominally “healthy” levels - an annual rate closer to 1.5 million units - sustained growth could begin to show in the labor market in the coming months. Fiscal uncertainty at the federal level, however, will likely continue to paralyze much of the economy until lawmakers reach a deal.

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December 10, 2019, 7:14 pm PDT

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