October US Housing Starts Bounce Back after Storms

Total housing starts leaped 13.7% in October to a 1.29-million seasonally adjusted annual rate, lifted by solid 5.3% growth in single-family starts and a 37.4% spike in the multifamily sector.

The joint data release from the U.S. Census Bureau and HUD measured single-family starts rising to an 877,000-unit annual pace, matching 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 year to date than the first ten months of 2016. 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.

The multifamily rebound follows a soft September reading. A more stable three-month moving average shows multifamily development continuing to the leveling off process begun in 2015. Multifamily starts are down 9.9% year to date.

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.