WASHINGTON (11/27/13)--A report published Tuesday by the Commerce Department suggests that the number of permits issued to construct new homes in the U.S. increased by 6.2% in October, reaching a post-recession high of 1.03 million.
Permits issued in September--a month that saw a 5.2% increase--were upwardly revised to 974,000. The largest number of permits issued since 2008 had previously occurred in April, when the department counted one million new approvals.
Most of the gains were in permits concerning buildings of five units or more. This relatively volatile sector of the industry saw permits increase by 17% in October, with most issuance occurring in the South and West (MarketWatch Nov. 26). Applications for single-family homes rose by 0.8% to 620,000.
The highest increase in the number of permits overall issued occurred in the South and West. Numbers were relatively stagnant in the Northeast and they declined in the Midwest.
The number of permits increased by an annual basis of 13.9% in October.
Moody's analysts said that the report indicates more robust homebuilding in the next few months, and the possibility of builders reversing "aggressive price increases" that characterized the housing market over the past half-year, after building activity slowed significantly in the second quarter (Economy.com Nov. 26).
But the firm's analysts also noted that, in October, there were 7,000 fewer single-family home permits issued than there were in August, revealing that this relatively more stable sector of the building industry is experience weak growth. Moody's analysts also said that rising mortgage interest rates, increasing material and land costs, and land and labor shortages could hamper supply growth--problems that could be offset if builders are flexible on prices and help with mortgage financing.
Not all permits lead to timely construction, and the Commerce Department said that October's partial government shutdown has delayed collection of September and October ground-breaking data. A report containing that information is expected to be published on Dec. 18 (MarketWatch.com Nov. 26).