Housing boom may flatten out
By Monee Fields-White
Bloomberg News Service
WASHINGTON — Home construction fell in October to the lowest in six months, a sign that the U.S. economy can't count on housing to boost economic growth.
Associated Press
Builders broke ground on new homes at an annual pace of 1.603 million units last month, as construction of single-family homes and apartments and other multifamily structures declined, the Commerce Department said. Starts fell 11.4 percent from September's 1.810 million pace to the lowest since April.
Workers position a roof truss on a townhome complex near downtown Los Angeles yesterday.Housing construction starts lost momentum in October, down 11.4 percent after September's 16-year high number of housing.
The pace of construction "will be easing off a bit to a plateau," said David Seiders, chief economist at the National Association of Home Builders. "Don't keep thinking of housing as a growth engine for the economy."
So far this year, 1.444 million homes have been started, the strongest January-October period since 1986.
While housing may not contribute much to economic growth in coming months, falling mortgage rates and record home sales will probably keep the pace of construction elevated, economists and executives said. Building permits in October reached an eight-month high.
Builders D.R. Horton Inc. and Centex Corp. have raised profit forecasts for next year. "The outlook for D.R. Horton is very positive," said Donald Tomnitz, president and chief executive officer of Arlington, Texas-based D.R. Horton. Fiscal fourth-quarter profit at the No. 4 homebuilder by stock market value rose a better-than-expected 57 percent.
Housing makes up more than half of all U.S. construction and supports the economy through spending on building materials, furniture and appliances.
Building permits, a gauge of future construction, rose 1.7 percent to a 1.763 million annual rate. That's the highest since February, when permits were at a 1.766 million rate.
