Housing Starts Climb in August, Permits Fall

U.S. housing starts unexpectedly rose 0.6% in August to their highest level in five months as low mortgage rates encouraged construction, but permits fell more than anticipated, a government report showed Tuesday.

Housing starts climbed to a seasonally adjusted annual rate of 2 million units from 1.99 million in July, the Commerce Department said. Analysts had expected starts to ease to a 1.94 million pace.

“It suggests that the housing market is still quite healthy despite the increase in mortgage rates earlier this year,” said Gary Thayer, chief economist at A.G. Edwards & Sons.

Housing starts climbed in every region except the West, where they slipped by 4.7%. Starts rose by 1% in the South, the region of greatest activity, by 4.8% in the Midwest, and by 6.5% in the Northeast.

Single-family housing starts rose to a rate of 1.67 million units, the strongest showing since November 2003.

Permits, a sign of builder confidence, slid 5.5% to 1.95 million units from a 2.07 million pace in July. Market watchers had forecast permits to ease to a 1.98 million unit pace.

Mortgage interest rates, which have hovered near historical lows, have fueled a multiyear housing boom in the U.S.