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U.S. home permits rise at 5-year high on apartments

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U.S. developers received approval in October to build apartments at the fastest pace in five years, a trend that could boost economic growth in the final three months of the year.

Permits to build houses and apartments were approved at a seasonally adjusted annual rate of 1.034 million, the Commerce Department said Tuesday. That's 6.2 percent higher than the September rate of 974,000 and the fastest since June 2008, just before the peak of the financial crisis.

Nearly all of the increase was for multi-family homes, a part of residential construction that reflects rentals and can be volatile from month to month. Those permits rose 15.3 percent, to a rate of 414,000, also the fastest since June 2008. Plans for construction in the U.S. south drove much of the increase.

Permits for single-family houses, which make up roughly two-thirds of the market, rose 0.8 percent, to a rate of 620,000. That's still slightly below the August pace of 627,000. And it suggests that higher prices and borrowing costs are weakening buyer demand.

Data on homes started in October and September were not included in Tuesday's report. Those figures have been delayed because of the government shutdown and will be released on Dec. 18 with the November home construction report.

The increase in permits suggests those figures will rise. And it indicates that "housing construction will make a much bigger contribution" to economic growth in the final quarter of the year, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

But the sales of single-family homes could soon slow in the coming months, if developers don't see greater demand soon, Shepherdson said.

"The flat trend in single-family is ominous," he said in a client note.

Construction of apartments has increased in the aftermath of the Great Recession, as the rate of homeownership has fallen from its 2006 peak of 69 percent to 64 percent. Lingering unemployment and stagnant incomes for millions of Americans have increased demand for rentals, which are at their lowest vacancy rates since early 2001.

Builders are also benefiting from a low supply of homes for sale, which has increased prices for sellers.

The rise in permits also suggests builders mostly shrugged off the partial government shutdown, which lasted from Oct. 1 through Oct. 16. The shutdown was blamed for delaying the release of the October and September housing data. And it continued to effect the government's reporting on homes started for those months.

Most economists expect the housing recovery will withstand an increase in borrowing costs. But the higher costs have slowed home sales in recent months.

Fixed mortgage rates have risen almost a full percentage point since late May, when borrowing costs were near record lows. Last week, the average on the 30-year loan was 4.22 percent, according to mortgage buyer Freddie Mac.

Mortgage rates are still low by historical standards. And steady job gains have made it possible for more Americans to buy homes.

Homebuilder confidence tailed off slightly after the government closed in October, according to a survey by the National Association of Home Builders. Their optimism flagged slightly out of concern that the shutdown and possibility another fiscal crisis at the start of next year will keep potential homebuyers on the sideline.

Though new homes represent only a fraction of the housing market, they have an outsized 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 NAHB statistics.

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  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

  4. Woohoo! We're #200!!! Absolutely disgusting. Bring on the congestion. Indianapolis NEEDS it.

  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

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