NEW YORK (CNNMoney) — The pace of home building rose to its highest level in more than four years in October, according to a government reading issued Tuesday.
The Census Bureau report showed builders started work at an annual pace of 894,000 homes last month, up 3.6% from the pace in September. Economists surveyed by Briefing.com had forecast a slight slowing in building.
The stronger-than-expected report came because of a surge in construction of buildings with five or more residences in them. Single-family home starts remained little changed from September. But the September and October readings were the two best months for single-family home starts since 2008 as well.
Applications for building permits slipped 2.7% to an annual pace of 866,000. Despite that decline, the October reading was stronger than any other month other than September over the course of the last four years.
The housing market has been showing numerous signs of recovery in recent months. Demand for homes have been helped by mortgage rates at record lows.
The Federal Reserve’s decision to buy $40 billion in mortgages every month is likely to keep rates low for the foreseeable future. The low mortgage rates, coupled with affordable housing prices and an improving jobs market have helped to restart home sales.
Foreclosures have fallen to a five-year low, reducing the supply of distressed homes available on the market. And four years of depressed levels of home building have cut the supply of new homes on the market to nearly record lows, according to a separate government report.
All these factors have helped to lift home prices and get builders back building again. So Tuesday’s report is just one more sign that the long-awaited housing recovery is taking hold.