Washington (AFP) - The booming US housing market showed no sign of letting up in October as new home construction rose more than expected even as permits stayed flat, government data showed Wednesday.
The real estate market has been one of the few consistent bright spots amid the gloom of the worsening coronavirus pandemic, with buyers aided by low mortgage rates snapping up properties despite the broader economic malaise.
That has led to a tightening of inventories and increase in average sale price for both new and existing properties, and the data from the departments of Commerce and Housing and Urban Development showed housing starts rising 4.9 percent from September's downwardly revised rate.
That was above analysts' expectations and brought them to an annual rate of 1.53 million, seasonally adjusted.
"Lean inventories will continue to support activity over coming months, in the single-family sector in particular," Rubeela Farooqi of High Frequency Economics said in an analysis. "Overall, housing remains an exception during the pandemic."
Single-unit homes led the gains in starts, rising 6.4 percent, while units of five or more declined 3.2 percent.
Homebuilders were busiest in the South, where starts climbed 12.9 percent, while construction decreased 38.6 percent in the Northeast.
Permits -- a volatile, forward-looking indicator of housing in the pipeline -- were essentially flat from September at an annualized rate of 1.55 million, in line with consensus.
Nancy Vanden Houten of Oxford Economics said the housing sector could continue to outperform the overall economy even as the virus causes more turmoil, but that's not certain.
"We expect some moderation in the pace of housing starts in the face of the rapidly escalating health crisis, a faltering recovery and softening labor market gains," she said.