Housing construction jumps to 9-month high

Housing construction rose in August to the highest level in nine months as a big surge in apartment building offset a decline
in single-family activity.

The August performance was another sign that the nation’s housing industry has begun
to recover from its worst downturn in decades.

The Commerce Department said today that construction of new homes
and apartments rose 1.5 percent, to an annual rate of 598,000 units last month. That is slightly lower than the 600,000-unit
pace that economists had forecast.

The increase pushed building activity to the highest level since last November
and left home construction 24.8 percent above the record low hit back in April.

Applications for building permits,
a good forecaster of future activity, posted a 2.7-percent rise in August, to an annual rate of 579,000 units, slightly below
the 580,000 level that had been forecast. Permits for single-family homes dipped by 0.2 percent while multifamily units rose
by 15.8 percent.

The 1.5-percent rise in housing starts followed a small 0.2-percent dip in July. The August strength
came from a 25.3-percent surge in construction of multifamily units, a volatile sector which had fallen by 15.2 percent in
July.

The larger single-family sector dipped by 3 percent last month to an annual rate of 479,000 units, the first
setback following five straight monthly gains.

By region of the country, construction shot up by 23.8 percent in
the Northeast and 0.9 percent in the Midwest. Activity was flat in the West and fell by 2.4 percent in the South.

Builders slammed the brakes on construction after the housing bubble burst following five consecutive boom years. The weakness
in housing spread to the financial sector as defaults on home mortgages soared. This all contributed to pushing the country
into the worst recession in seven decades. Economists believe the overall downturn has ended as well.

Builders
have been ramping up because buyers want to take advantage of a new federal tax credit for first-time homebuyers. It covers
10 percent of a home price up to $8,000, and is set to expire at the end of November.

The National Association
of Home Builders said today its housing market index rose in September, reflecting growing optimism in the industry about
rising home sales. The trade association said its index rose one point to 19, the highest reading since April 2008.

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