Building permits increased 6.2% in October to a seasonally adjusted annual rate of 1.03 million, according to a Reuters report. That beat economists’ projections of 930,000 units, and is the highest rate since June of 2008.
Meanwhile, the Case/Shiller composite index of 20 metropolitan areas was up 123.9% year over year in September, the largest jump since February of 2006, according to Reuters.
Although home sales have slowed in recent months due to rising interest rates, observers point to the gains as evidence that the housing recovery is still on course.
“These reports are unequivocally in line with our view that the housing recovery remains well on track, as the lack of supply will continue to support both construction activity and house prices,” Harm Bandholz, chief U.S. economist at UniCredit Research, told Reuters.
But others warn that the housing gains, along with better-than-expected jobs reports in October, could tempt the Federal Reserve to slow its $85bn-per-month bond-buying program as early as December, Reuters reported. The program led to historically low interest rates, and talk that the Fed would taper in September led mortgage rates to jump more than a full percentage point over the summer, strangling the refinancing boom.
Home construction permits hit their highest mark in more than five years last month, while prices for single family homes showed big gains in September.