By JOSH BOAK
AP Economics Writer
WASHINGTON (AP) — U.S. home building jumped 3.8% in October, a good sign for the economy as developers foresee steady demand.
The Commerce Department said Tuesday that housing starts reached a seasonally adjusted annual rate of 1.31 million. Starts for single-family houses were up 2%, largely because of construction in the West and South. The number of apartment buildings put up rose by 6.8% from the previous month.
Lower mortgage rates and a strong job market have aided the housing market in recent months, yet housing starts are still down 0.6% year-to-date as a shortage of land and high construction costs have restricted building. Affordability is a concern for many would-be buyers as increases in home prices have outpaced wage growth.
The average 30-year mortgage has an interest rate of 3.75%, down from 4.94% a year ago, according to the mortgage buyer Freddie Mac. Cheaper borrowing costs have buoyed demand, but a broader shortage of homes for sale has caused prices to generally rise faster than incomes since 2012, when the market began to recover from the Great Recession.
The number of building permits issued, a measure of future construction, rose 5% in October to 1.46 million. The bulk of the gains in permits so far this year has been for apartment complexes, whereas the number of permits issued for single-family houses has slumped by 1.5%.