US housing starts beat expectations in September

Construction on new US homes snapped a two-month decline and rose in September, figures released on Tuesday showed.

According to the Commerce Department, housing starts climbed 6.5% last month to reach an annualised rate of 1.21m compared with an upwardly revised reading of 1.1m in the previous month, while analysts expected a largely unchanged reading.

Meanwhile, starts for single-family homes rose 0.3% to an annual rate of 740,000 and those buildings with at least five units surged 17% to 454,000.

However, permits for new construction, which are a closely-followed gauge of future demand, declined 5% to an annual rate of 1.10m.

Permits for single-family homes, which account for approximately 75% of the housing market, fell 0.3% to 697,000 in September.

"Stronger-than-expected housing starts suggest more residential investment," said analysts at Barclays.

"However, much of this activity is likely to show up in construction spending in the fourth quarter.

"Our third quarter GDP tracking estimate remains unchanged after rounding at 1.2%.