U.S. housing starts rose more than expected in October as low mortgage rates continued to fuel construction, particularly in the single-family home sector.

Reuters warned, however, that the housing market’s “momentum could slow amid a resurgence in new COVID-19 infections that is putting strain on the economic recovery.”

“The million-dollar question remains how long the recovery in housing can continue as the shocking number of new coronavirus cases is paralyzing commerce in many parts of the country and leading to new restrictions and lockdowns,” said Chris Rupkey, chief economist at MUFG in New York.

The Commerce Department reported Wednesday that housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units last month, lifting homebuilding closer to its pre-pandemic pace of 1.567 million units in February.

Economists polled by Reuters had forecast starts would rise to a rate of 1.460 million units in October.

The surge in single-family home construction continued for a sixth straight month with an October gain of 6.4% to a seasonally adjusted annual rate of 1.179 million units — the highest level since April 2007.

“Homebuilding is being driven by lean inventories, especially for previously-owned homes, and low mortgage rates,” Reuters said. The 30-year fixed mortgage rate is around an average of 2.84%, according to data from mortgage finance agency Freddie Mac.

In the single-family sector, the pandemic has seen at least 21% of the labor force working from home, leading to “a migration from city centers to suburbs and other low-density areas as Americans seek out spacious accommodation for home offices and schools,” according to Reuters.

The densely populated South accounted for 56.1% of homebuilding last month, with activity also increasing in the West and Midwest, but tumbling in the Northeast.

“Just over 80% of all single-family homes built over the past year have been in the South or West, which means that construction can continue at a much higher pace during the winter months than in prior years,” said Mark Vitner, a senior economist at Wells Fargo Securities.

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