New US home construction unexpectedly picked up in October, indicating builders continue to benefit from a limited supply in the resale market.
Residential starts increased 1.9% last month to a 1.37 million annualized rate, the highest in three months, government data showed Friday. Construction of single-family houses edged up 0.2%, also to the highest level since July.
Applications to build — a proxy for future construction — rose to 1.49 million. Permits to build one-family homes increased to the highest level since May 2022, while multifamily authorizations also rose.
While elevated financing costs and stubborn prices continue to take a toll on demand, limited listings of previously owned homes are steering buyers toward new construction. Against a backdrop of higher mortgage rates, builders have been offering cheaper financing rates and other incentives to entice prospective buyers.
Sales of new homes are largely on the rise, and homebuilder shares have recently surged as traders see lower borrowing costs on the horizon.
