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U.S. Home Construction Fell 9.4% Last Month

Single-family housing starts rose a bit (0.3% higher), but a sharp 28.3% drop in apartment construction caused the overall decline. Building permits were down 2.7%.

WASHINGTON (AP) – U.S. home building fell last month, driven by a sharp decline in the construction of new apartments.

The Commerce Department said Thursday that housing starts dropped 9.4% to a seasonally adjusted annual rate of 1.26 million. The construction of new apartments plunged 28.3% to an annual pace of 327,000.

On a brighter note, single-family home building ticked up 0.3% to an annual rate of 918,000. Single-family construction typically creates more jobs than apartment units.

September’s drop comes after overall home building, fueled by lower mortgage rates, reached a 12-year high in August. Sales of existing homes rose to a 17-month high that month and sales of new homes jumped.

Building permits, a measure of future construction, slipped 2.7% in September to 1.39 million.

Despite last month’s decline, home construction has risen 1.6% in the past year. Single-family home building is up 4.3% from a year ago.

Building permits have also increased in the past year, rising 7.7%. Permits to build single-family homes rose 2.8% in September from a year earlier while apartment permits soared nearly 21%.

In September, construction fell the most in the Northeast, where it plummeted 34.3%. It also dropped sharply in the Midwest, where it declined 18.9%. Starts dropped 4% in the South and 1.9% in the West.

Mortgage rates are near historic lows, with the average interest rate on a 30-year loan below 4%. They may fall further in the coming months if the Federal Reserve cuts short-term rates at its next meeting later this month, as some economists predict.

Copyright 2019 The Associated Press, Christopher Rugaber. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.