WASHINGTON (AP) - U.S. builders started slightly fewer homes in October but submitted plans for a wave of apartments, a mixed sign for the struggling housing market.
Builders broke ground on a seasonally adjusted annual rate of 628,000 homes last month, the Commerce Department said Thursday. That's down 0.3 percent from September and roughly half the 1.2 million that economists say must be built to sustain a healthy housing market.
But building permits, a gauge of future construction, rose nearly 11 percent. The increase was spurred by a 30 percent increase in apartment permits, which reached its highest level in three years.
New-home construction and sales are in the midst of one of its worst years in history. Demand for new homes is weak and historically-low mortgage rates and plunging home prices have done little to help.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. The surge in apartments may help boost economic growth, but it has not been enough to offset the steep declines in single-family homebuilding.
Overall, homebuilding dipped in 2009 to just 554,000 homes, the lowest levels in 50 years in 2009. Last year the figure rose to roughly 587,000 homes and this year may not be much better.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. And few homes are selling.
Though new homes represent just 20 percent of the overall home market, they have an outsized impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.