September Shock: National, Florida Housing Starts Shoot Up

In a sign that demand for Florida home loans is on the rise, housing starts around the state and country rose last month. They had been in a three-year low.

However, falling mortgage rates are drawing buyers back into the market, a sign the housing slump may be nearing bottom.

Housing start figures

Housing starts increased 5.9 percent to an annual rate of 1.77 million from a 1.67 million pace in August, the Commerce Department said Wednesday in Washington. Stepped-up construction in the Midwest and the South made up for declines in the Northeast and the West.

Building permits, however, dropped for an eighth straight month to the lowest level in almost five years.

Builders broke ground on new projects last month after cutting prices and offering incentives to clear out inventories of unsold homes. An index of home builder confidence increased this month for the first time in a year, led by rising sales expectations for the next six months.

“The housing sector free fall may be abating,” James Shugg, a senior economist at Westpac Banking Corp. in London, said before the report. “We don’t think it’s going to derail the U.S. economy, but it’s going to slow it for a while.”

Housing starts, which increased for the first time since May, are down almost 18 percent from a year earlier. There are signs, though, that Florida mortgage applicants are returning.

Sales of new homes unexpectedly rose in August, as well, proving that buyers are very much still out there. This took place after the previous three months’ figures were revised down, and inventories of unsold new homes edged down from a four-decade high, the Commerce Department said Sept. 27.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 31 this month from 30 in September, when it reached its lowest level in 15 years, the group reported Tuesday in Washington.