Housing Starts Take Off in October

20 November 2017

Housing Starts Take Off in October

NAHB

20 November 2017

Total housing starts increased in October, with solid readings from the single-family sector. Total starts increased 13.7% to a 1.29 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD. A jump in multifamily construction also increased the headline rate.

Single-family starts increased for the month, rising to an 877,000 seasonally adjusted rate in October. This monthly annualized rate matches the post-recession high pace set in February of this year. However, the three month-moving average for single-family starts is at a post-recession high (860,000). Single-family starts are up more than 8% year-to-date compared to 2016 as limited existing inventory and solid builder confidence make for positive market conditions.

Single-family permits, a reasonable indicator of future construction conditions, are running 10% higher on a year-to-date basis. Part of the gain for single-family construction in October was a rebound in Florida and Texas after project delays in September. Single-family starts in the South were up 17% compared to September.

Multifamily starts rebounded in October, as the market seeks a balance between supply and demand. Multifamily starts increased 37%, after a soft September reading. On a more stable three-month moving average basis, multifamily development continues a leveling off process begun in 2015.

With respect to housing’s economic impact, 56% of homes under construction in October were multifamily (610,000). As noted in the graph above, with recent production declines for apartments, the current count of multifamily units is effectively unchanged from a year ago. There were 486,000 single-family units under construction, a gain of 10% from this time in 2016.