Ahead of the Bell: US Housing Starts

First look at permits for US home construction since the 16-day partial government shutdown

Associated Press
US home permits rise at 5-year high on apartments
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In this Monday, Nov. 11, 2013 photo, Will Hostetler, a carpenter with Larry Block Builders, carries trim downstairs at a new home under construction, in Pepper Pike, Ohio. The Commerce Department reports on the number of permits requested in October and September to build homes, on Tuesday, Nov. 26, 2013. (AP Photo/Tony Dejak)

WASHINGTON (AP) -- The Commerce Department reports on the number of permits requested in September and October to build U.S. homes and apartments. Report to be released at 8:30 am EST Tuesday.

ANOTHER DELAY FOR HOUSING STARTS: The government will release only permit data on Tuesday for those two months. Normally, the report also includes the annual pace of homes started. But Commerce has delayed that information a second time, citing the partial government shutdown again as the reason. It says it will release those figures with the November report on Dec. 18.

The October housing starts report was initially scheduled to be released on Nov. 19, while the September data was originally slated for Oct. 17. The shutdown, which lasted from Oct. 1 through Oct. 16, prevented the government from collecting data.

SINGLE-FAMILY HOMES MOMENTUM: The last report on home construction showed builders started work in August on the most single-family homes in six months and requested permits to construct even more in future months. Both were encouraging signs that the housing recovery would endure, despite higher mortgage rates.

In August, builders requested 627,000 permits for new single-family homes on an annualized basis. That was 3 percent more than July and the best pace since May 2008.

Permits to build apartments had fallen 15.7 percent to 268,000. But apartment construction can be volatile from month to month. Since the recession ended, demand for apartments has increased because high unemployment and lower wages have kept many Americans from saving enough to afford a house.

MORTGAGE RATES A FACTOR: Mortgage applications declined slightly in September, according to the Mortgage Bankers Association. So builders might also be hesitant to ramp up additional construction until they see continued growth in demand.

Fixed mortgage rates have risen almost a full percentage point since late May, when borrowing costs were near record lows. Last week, the average on the 30-year loan was 4.22 percent, according to mortgage buyer Freddie Mac.

SLOW BUT STEADY RECOVERY: Most economists expect the housing recovery will withstand the increase in borrowing costs. Mortgage rates are still low by historical standards. And steady job gains have made it possible for more Americans to buy homes.

Homebuilder confidence tailed off slightly after the government closed in October, according to a survey by the National Association of Home Builders. Their optimism flagged slightly out of concern that the shutdown and possibility another fiscal crisis at the start of next year will keep potential homebuyers on the sideline.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.

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