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DOSSIER – On this 23 July 2018, photo file of a construction worker laying roofing paper on a new house while he works outside in Houston. On Tuesday, November 20, the Commerce Department reports on the construction of homes in the United States in October. (AP Photo / David J. Phillip, File) The Associated Press
By JOSH BOAK, AP Writer of economy
WASHINGTON (AP) – Home construction in the United States improved 1.5% in October, but as a disturbing sign, the start of single-family home construction has plummeted.
The Commerce Department said on Tuesday that housing starts had reached a seasonally adjusted annual rate of 1.23 million, up from 1.21 million in September. The gains come entirely from apartments. Single-family home starts fell 1.8% last month.
Housing has stumbled in recent months as mortgage rates have risen, making it possible to buy a home or move into a nicer and more inaccessible property for more Americans. A sharp rise in mortgage rates has led to a sharp decline in home construction since May, with land closures falling 2.6% in the last 12 months.
The 30-year average fixed rate mortgage has soared by a full percentage point over the last year to reach 4.94%, according to its buyer, Freddie Mac. This reference rate is at its highest level since February 2011.
Permits, an indicator of future activity, decreased by 0.6% to reach an annual rate of 1.26 million.
This decline in construction occurred as new home sales began to slow.
New home purchases have fallen sharply over the last four months, including a sharp drop of 5.5% in September, according to a Commerce Department report last month. The annual rate of home sales has declined 15.3% since May, a sharp reversal from the growth recorded in the first five months of 2018.
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