U.S. home construction down 2.8%

Construction of new homes fell slightly in October after a big surge in the previous month, but the weakness was largely driven by the volatile apartment sector.

The Commerce Department says builders started construction at a seasonally adjusted annual rate of 1.009 million last month, a drop of 2.8% from September when construction had jumped 7.8% to 1.038 million. The weakness last month stemmed from a 15.4% plunge in apartment construction. Construction of single-family homes was up 4.2%, the third gain in the past four months.

Read: U.S. homebuilder confidence rises in November

Applications for building permits, a good sign of future activity, rose 4.8% in October to 1.08 million.

Economists believe the housing recovery, which had slowed earlier this year, will gain momentum in coming months, helped by stronger job growth.

“The six-month building pace now stands at an even 1,000,000, a level for starts we think could hold for the next few months,” says Nick Exarhos of CIBC WM Economics in a note to analysts. “This morning’s release shouldn’t move markets too much, especially with most participants eagerly awaiting the release of the Fed minutes later this afternoon.”

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Housing starts sluggish

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.