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Signs of recovery in US housing market

Wednesday, October 17 14:28:55

Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector's budding recovery is gaining traction and supporting the wider economic recovery.

Housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units, the Commerce Department said on Wednesday.

That was the quickest pace since July 2008, though data on starts is volatile and subject to substantial revisions.

The U.S. economy has shown signs of faster growth in recent months as the jobless rate has fallen a nd retail sales data has pointed to stronger consumer spending.

The data showed housing, which was battered by the 2007-09 recession, is increasingly one of the brighter spots in the economy and could add to growth this year for the first time since 2005.

"One of the big headwinds for the economy has been the weak housing market and this indicates that headwind has dissipated," said Gary Thayer, an economic strategist at Wells Fargo Advisors in St. Louis, Missouri.

The brighter economic signal is likely to be welcomed at the White House, where a sluggish economy is weighing on President Barack Obama's chances of re-election next month.

E conomists estimate that for every new house built, at least three new jobs are created.

More home building could help compensate for some of the weakness recently in factory output, which is seen as due to sluggish export demand and cooling investment in capital goods.