Privately-owned housing starts in October grew at a seasonally adjusted annual rate of 1.228 million units, according to new data from the U.S. Census Bureau. That was a 1.5 percent increase from September’s upward-revised print but a smaller rebound than anticipated and 2.9 percent lower compared to this same period last year. All of the strength in October was due to multi-family units (rentals), which snapped back by 6.2 percent, while single-family starts actually fell by 1.8 percent. Regionally, starts rose in the Midwest (32.9 percent) and the South (4.7 percent) last month and fell in the Northeast (-34.1 percent) and the West (-4.6 percent).
As for building permits, this metric of future construction activity also disappointed forecasts in October (-0.6 percent), but some argue this is to be expected with the number of homes under construction in America now at the highest level since 2007 (1.14 million). Regardless, homebuilder optimism has turned sharply lower recently, according to new NAHB data. Specifically, the headline sentiment gauge plunged from 68 to 60 in November, the largest monthly decline since 2014 and the weakest reading in more than two years. Under the hood, measures of current sales conditions, sales expectations six months from now, and prospective buyer traffic all deteriorated. NAHB chief economist Robert Dietz added that “For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction. While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”
Sources: Econoday, U.S. Census, NAHB, ZH, Bloomberg, FRBSL
Post author: Charles Couch