NAHB

20 October 2015

Housing starts for the month of September rose 6.5% to an eight year high of 1.206 million units on a seasonally-adjusted annual basis. The increase was all in the multifamily sector, rising 18.3% to 466,000. Single-family starts were virtually unchanged at 740,000. This is the first month total starts passed the 1.2 million mark since October 2007.

The trends in both are more apparent on a quarterly or year-to-date basis that smooths some of the monthly irregularities inevitable in sample data. Single-family starts averaged 746,000 for the third quarter, up 5.7% from the second quarter. Multifamily starts averaged 418,000 for the third quarter, down 7.3% from the second quarter. On a year-to-date basis, both increased: single-family starts are up 11% from the same period in 2014 and multifamily starts are up 13.8%. These averages provide a clearer picture of the steady increase in housing construction that we have been experiencing for several years.

Permits were down 5% but that change was also due entirely to the multifamily sector. Single-family permits were virtually unchanged at 697,000 while multifamily permits fell 12.1% to an annualized rate of 406,000. Multifamily permits accelerated in June as builders drew permits to beat new regulatory deadlines and builders are working off that inventory. On a year-to-date basis, the trends are more informative with single-family increasing 9.4% and multifamily up 18.8%.

The smoothed trends tell the same story: single-family production continues to move forward at a modest pace as more current home owners feel comfortable selling their existing home and buying a new one. Younger, newly formed households continue to move out of their parents or roommate living arrangements and rent an apartment driving up the demand for more rental units. NAHB expects this same trend to continue into 2016.