New-home construction in the U.S. surged in September to the highest level in four years, a sign the industry is on the road to recovery. Starts jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, Commerce Department figures showed today in Washington. The median estimate of 81 economists surveyed by Bloomberg called for 770,000. An increase in building permits may mean the gains will be sustained.
A pickup in sales stoked by record-low mortgage rates and population growth combined with dwindling supply indicates construction can continue strengthening, contributing more to economic growth. At the same time, the level of starts remains below the pre-recession peak, limiting how much the industry can boost the rate of expansion.
â€œThe housing market certainly has turned,â€ said Brian Jones, a senior U.S. economist at Societe Generale in New York, whoâ€™s forecast for 790,000 starts was among the highest. â€œBut we still have a long way to go. The good thing is that construction will pull employment with it.â€
Stock-index futures extended earlier gains after the report. The contract on the Standard & Poorâ€™s 500 Index maturing in December climbed 0.3 percent to 1,452.8 at 8:45 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 1.77 percent from 1.72 percent late yesterday.
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