The pace of new home construction exceeds expectations. Learn more about the latest real estate market trends.
The pace of new home construction exceeded analysts’ expectations in October, increasing 3.6 from September for an annual gain of nearly 42 percent, according to the latest real estate market trends reported today by the Commerce Department.
“The better-than-expected housing sector performance is due to continued low mortgage rates, a better-than-expected increase in house prices and a significant amount of pent up demand that has finally begun to release itself,” according to today’s Eye on Housing blog from the National Association of Home Builders or NAHB .
New home construction took place at a seasonally adjusted annual rate of 866,000 in October, up from the September rate of 863,000 and the October 2011 rate of 630,000. Hurricane Sandy had a “minimal” impact on the October data, according to the Commerce Department.
The monthly increase reflects activity in multi-family rental units, while construction of single-family homes was essentially flat, dipping 0.2 percent, according to the NAHB
The number of new building permits, a predictor of future real estate market trends, fell 2.7 percent in October. Issuance of single-family permits rose 2.2 percent to 562,000 – the highest since June 2008, according to the NAHB, while permits for multi-family construction fell 10.6 percent from a high level of activity in September.
Despite the positive movement in real estate market trends, the uncertainty surrounding federal deficit reduction and anticipated changes to mortgage lending rules “have a kept a lid on any greater housing expansion,” according to the NAHB.
Data released yesterday by the National Association of Realtors reported a 2.1 percent increase in existing home sales for October, as well as an 11.1 percent annual increase in median home prices. In other real estate market trends, confidence among home builders rose for the seventh straight month to a high last seen in May 2006, according to the NAHB Housing Market Index.