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.
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