WASHINGTON (MarketWatch) — U.S. housing starts rose to a nearly an eight-year high in September as builders ramped up construction of apartments. The Commerce Department report on Tuesday added to the sense of a firming housing sector, helped by a healthy labor market. Construction of new homes increased 6.5% to a seasonally adjusted annual pace of 1.21 million units in September. Economists polled by MarketWatch had forecast groundbreaking on new homes rising to a 1.14 million-unit pace last month. After two months of declines, the gain in September brings as starts back to just below June’s level, which was an eight-year high, a sign that builders are growing more confident in the economy. That confidence was seen in a separate report released Monday, as the National Association of Home Builders/Wells Fargo housing market index rose to a fresh decade high in October. Housing starts have now been above a one million-unit pace for six straight months. In September, starts for single-family homes, which accounts for the largest share of the market, rose 0.3% to a 740,000 unit pace. Single-family home building in the South, where most of the home construction takes place, rose to the highest level since October 2007. Starts for the volatile multifamily segment rose 17% to a 454,000 unit rate. That’s the segment of the housing market seeing the fastest growth. Meanwhile, permits for new construction, a sign of future demand, fell 5% in September to 1.10 million. The pace of permits for single-family homes fell 0.3% to an annual rate of 697,000, while the pace of permits for apartments fell 14.6% to 369,000. Economists caution over reading too much into a single monthly home-construction report because the data are subject to substantial revisions. While the housing market has been hot, Federal Reserve officials are trying to gauge how much a healthy domestic economy may be held back by slower growth overseas.

Source