Housing starts indicate stabilizing market

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Builders in the United States began work on more homes in September, a sign the real estate market was stabilizing at depressed levels heading into the recent upheaval in the foreclosure crisis, Bloomberg reported.

Housing starts rose to a 610,000 annual rate, the fastest pace since April and up 0.3 percent from a revised 608,000 rate in August that was higher than previously estimated, Commerce Department figures released today in Washington, D.C. Building permits dropped to the lowest level in more than a year as a plunge in the volatile multifamily area overshadowed a gain in single-family applications.

The industry that precipitated the worst recession since the 1930s may be steadying after a government tax credit pulled demand into late 2009 and early this year. At the same time, foreclosure moratoria caused by faulty documentation at some of the nation’s biggest banks, near record-low home sales and a lack of jobs mean any rebound will take time to develop.

“At least we’re making some progress here,” said John Herrmann, senior fixed income strategist at State Street Global Markets in Boston, in an interview with Bloomberg. “It’s a slow, steady-as-she-goes improvement in builder activity.

Building permits, which presage for future construction, decreased 5.6 percent to a 539,000 annual rate in September, the lowest level since April 2009. Applications for multifamily units dropped 20 percent, while those for single-family homes climbed 0.5 percent.

The number of single-family permits was lower than starts last month, which climbed 4.4 percent from August to a 452,000 annual pace, the highest since May. The level of permits raises the risk that construction will drop off in coming months.