Builders in the United States started construction last month on the most homes and apartments since July 2008, more evidence that the housing recovery was gaining momentum.
The Commerce Department said Tuesday that builders broke ground on homes in October at a seasonally adjusted annual rate of 894,000. That’s a 3.6 percent gain from September.
Single-family home construction dipped 0.2 percent to an annual rate of 594,000, down from a four-year high in the previous month. Apartment construction, which is more volatile from month to month, rose 10 percent to an annual rate of 285,000.
Applications for building permits, a sign of future construction, fell 2.7 percent to 866,000, after jumping 12 percent in September to a four-year high. Still, permit applications to build single-family homes rose to their highest level since July 2008.
“The overwhelming trend here is a housing market that has clearly shifted into recovery mode,” Robert Kavcic, an economist at BMO Capital Markets, said in a note to clients.
Housing starts were 87 percent above the annual rate of 478,000 in April 2009, the recession low. But it was still short of the 1.5 million annual rate considered healthy.
The hurricane that struck the Northeast had minimal impact on the October figures, the government said, although it could delay some construction in November. Still, residential construction activity in the region could move higher soon after, when builders begin replacing homes destroyed by the storm.
The housing market has been making consistent gains this year, helping prop up an economy that is being squeezed by a global slowdown and looming spending cuts and tax increases.
Builder confidence rose to its highest level in six and a half years, according to a survey by the National Association of Home Builders/Wells Fargo. Their index of builder sentiment rose to 46 points this month, up from 41 in October. It was the highest reading since May 2006, just before the housing bubble burst.
Readings below 50 signal negative sentiment about the housing market. The index has been rising since October 2011, when it was 17. It has surged 27 points in the past 12 months, the sharpest annual increase on record.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders group.