WASHINGTON — The pace of U.S. home construction rose for the second straight month in September, expanding 0.3% to a seasonally adjusted annual rate of 610,000, the Commerce Department reported Tuesday. Building permits fell 5.6% to a 17-month low of 539,000.
Economists expected building permits and housing starts to each hit 580,000.
August housing starts were revised upward to a 608,000 rate from an originally reported 569,000. August building permits were revised downward to a 571,000 rate from an initially reported 598,000.
Housing starts have averaged 1.496 million a year since the index began in 1959. However, the annualized pace of monthly starts has not topped that level since February 2007. The record-low pace of 477,000 was established in April 2009, two months before the recession ended.
“The level of housing activity remains extremely low, given how far we are into the expansion,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “We have a long way to go just to restore starts to a level consistent with the household formation, let alone tap the pent-up demand that is building due to record-low rates and an exceedingly high level of affordability.”