Single-family housing starts jumped to a seasonally adjusted annual rate of 869,000 in October, according to new residential construction data released by the Commerce Department Wednesday morning. This month’s result marks a significant 10.7% increase from September’s upwardly-revised rate of 785,000, and represents a 21.7% gain compared to October 2015, when the estimate was 714,000.
All regions saw an increase month-over-month for 1-unit housing starts, with the West and the Northeast experiencing the biggest gains, increasing 21.2% and 11.3% from September levels, respectively. Steady growth continued in the South and the Midwest, with starts increasing 7.3% and 6.0% month-over-month, respectively. On a year-over-year basis, all regions reported gains in the single-family category. Gains were most significant in the West, where this month’s levels surpassed October 2015 levels by 35.2%
Total housing permits, the leading indicator for future starts, rose a scant 0.3 in this month, primarily due to a big dip in the multifamily sector, especially permits for 2-4 unit structures, which fell -22.2% month-over-month. Single-family permits rose 2.7%, indicating a solid outlook for next month’s report. The Northeast and West regions saw the biggest increase in permits issued for 1-unit structures, while the Midwest was lukewarm in October, with permits dropping -1.7%.
Total privately-owned housing completions increased 5.5% month-over-month to a seasonally adjusted annual rate of 1,055,000. Completions of both single-family and multi-family housing increased in October following September’s lackluster report, by 3.9% and 12.8%, respectively.
“Multifamily production bounced back after an unusually weak reading last month while single-family starts exhibited unusually strong growth as well,” said NAHB Chief Economist Robert Dietz. “Though October’s single- and multifamily production rates are clearly unsustainable, we expect continued growth in the housing sector in the months ahead.”
Lawrence Yun, chief economist for the National Assocation of Reators, reacted to the news with glee. He issued the following statment:
“Housing starts soaring past the 1.3 million mark for the first time since 2007 is big and welcoming news. The choke point of the housing market growth potential has been the lack of supply. The consequent tight inventory conditions has been pushing up home values to rise at faster rate than income growth over the past four years. This in turn has hurt affordability and contributed to the home ownership rate dipping to a 50-year low.
“Now that supply is improving, future price growth should taper a bit. There is no oversupply threat and even more construction is still needed to help relieve housing shortage. Let’s hope the rising construction activity continues.”
Read the full release from the Commerce Department here>>
