WASHINGTON — U.S. home construction improved a slight 1.5 per cent in October, but in a troubling sign, groundbreakings for single-family houses fell.
The Commerce Department said housing starts rose to a seasonally adjusted annual rate of 1.23 million, up from 1.21 million in September. The gains came entirely from apartments. Starts for single-family houses slipped 1.8 per cent last month.
Housing has stumbled in recent months as mortgage rates have climbed, putting the ability to buy a home or move up to a nicer property out of reach for more Americans. A sharp increase in mortgage rates has led to a marked decline in home construction since May, such that groundbreakings have fallen 2.6 per cent over the past 12 months.
The average 30-year fixed rate mortgage has shot up a full percentage point in the past year to 4.94 per cent, according to mortgage buyer Freddie Mac. This benchmark rate is at its highest average since February 2011.
Permits, an indicator of future activity, declined 0.6 per cent to an annual rate of 1.26 million.
This pullback in construction has occurred as sales of new homes have begun to stall.
New-home purchases have plummeted for the past four months, including a steep 5.5 per cent drop in September, according to a Commerce Department report last month. The annual rate of home sales has declined 15.3 per cent since May, a striking reversal from the growth seen during the first five months of 2018.