U.S. Building Permits Soared to Their Highest Level in Nearly Eight Years

Source: Bloomberg

by Michelle Jamrisko
June 16, 2015 — 8:30 AM EDT

The U.S. home-building industry enjoyed its best two months in more than seven years as it headed into its busiest season, even as it began work on fewer houses last month following an April surge.

While housing starts declined 11.1 percent to a 1.04 million annualized rate it followed April’s revised 1.17 million pace to cap the best back-to-back readings since the last two months of 2007, the Commerce Department reported Tuesday in Washington. The median estimate of 81 economists surveyed by Bloomberg called for 1.09 million. Permits for future projects climbed to the highest level in almost eight years, indicating activity will probably pick up.

The data show the residential real estate market was sustaining gains after sporadic advances earlier in the year that reflected bad weather and a slump in overall U.S. growth. Hiring momentum and bigger paychecks amid still-cheap borrowing costs are brightening Americans’ moods and could lift home purchases in the second half of 2015.

“A big decline was almost inevitable after such a surge in April,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, whose forecast for 1.05 million starts was among the closest in the Bloomberg survey. “With the labor market continuing to improve and unemployment coming down, overall conditions for housing should remain pretty favorable.”

Read more: http://www.bloomberg.com/news/articles/2015-06-16/builders-started-most-u-s-homes-in-past-two-months-since-2007