Builders broke ground for new U.S. single-family homes and applied for permits to build them at record high paces in October, as persistently low mortgage rates fueled an unflagging housing market, a government report showed Wednesday.
Total U.S. housing starts -- consisting of single- and multi-family homes -- jumped 2.9% to a seasonally adjusted annual rate of 1.960 million units in October from an upwardly revised 1.905-million pace in September, hitting the highest pace since January 1986.
Total starts well exceeded the expectations of analysts, who had forecast a 1.850-million-unit rate. Single-family starts surged 5.7% to 1.617 million units, the highest pace on record.
Total permits, an indication of builder confidence in future sales, climbed 5.2% to 1.973 million authorizations to build, the highest rate since February 1984. Permits to build single-family homes rose 3.2% to 1.535 million units, the highest on record.
Mortgage rates have hovered not far above four-decade lows as the Federal Reserve stressed it would not raise official interest rates for some time. Low rates and slim inventories of homes available for sale have fueled strong demand for housing.
Separate reports released earlier in the day showed that applications for U.S. home loans rose last week as new requests for loans to buy homes picked up, and 30-year mortgage rates fell to their lowest levels since early July.
Mortgage demand and home sales are both poised to set records for 2003.
Regionally, housing starts boomed in the West, rising 17.7%, and climbed 4.9% in the South. Starts fell 18% in the Northeast and dropped 8% in the Midwest.
"While it's not totally uniform and even in the country, you still have a broad-based, active housing market, and it's likely to continue as long as mortgage rates stay as low as they are," said Stuart Hoffman, chief economist for PNC Financial Services.