Falling interest rates have turbo-charged the residential construction market, fueling a big increase in August in housing starts across the United States, Commerce Department data indicated Wednesday.
Construction of new homes and apartments jumped 12.3% in August compared to the same month last year, to a seasonally-adjusted 1.364 million units, the highest in more than a decade, the Department reported.
U.S. housing starts beat industry estimates of 1.250 million for the month.
The number of building permits pulled by developers for new homes and apartments, a key indicator of future construction activity, hit the highest level since May 2007, with permits for single-family homes jumping 4.5% in August, while permits for new apartments and condos rose 13.3%, the Commerce Department said.
The surge in new residential construction comes as falling mortgage rates lower the cost of buying a home or financing a new project.
The Federal Reserve last month cut interest rates by a quarter percent in a bid to bolster the U.S. economy amid trade tensions and slowing global growth, with the central bank expected to follow suit with another rate cut at its meeting today. A decision is expected to be released before 2 p.m.
The surge in building starts also comes after a months-long slowdown raised worries about the health of real estate. Construction of new apartment units led the way, with builders starting work on 445,000 units in August, for a 32.8% increase over last year. Starts of single-family homes rose 4.4% to an annualized rate of 919,000 units in August.