U.S homebuilders broke ground on new houses and apartments at the fastest pace since July 2008 last month, U.S. data showed Wednesday.
The Commerce Department said developers started single-family home and apartment construction at a seasonally adjusted annual rate of 872,000 in September. That's an increase of 15 per cent from the August level.
Applications for building permits are a leading indicator of future construction and they, too, were higher, jumping 12 per cent to an annual pace of 894,000.
Although both starts and building permits are now at the highest level in more than four years and an indication that the housing recovery is strengthening, it's still a fraction of the level home construction was at during the peak of the U.S. housing market. In January 2006, starts were at a seasonally adjusted annual rate of 2.2 million.
The strength in September came from both single-family construction, which rose 11 per cent, and apartments, which increased 25.1 per cent.
Construction activity is now 82.5 per cent higher than the recession low hit in April 2009. Activity is still well below the roughly 1.5 million rate that is consistent with healthier markets.
Record-low mortgage rates have encouraged more people to buy. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.
Housing is expected to keep improving next year. But many economists say economic growth will stay muted until companies step up hiring and consumers start spending more.
Though new homes represent less than 20 per cent 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 home builders group.