October Housing Starts Rise, But Still Short of Expectations

The U.S. Census Bureau and the Department of Housing and Urban Development reported Tuesday morning that new housing starts in October rose to a seasonally adjusted annual rate of 1.228 million, an increase of 1.5% from the downwardly revised September rate of 1.21 million and a decrease of 2.9% compared with the October 2017 rate of 1.265 million.

The revision to the September rate added 9,000 new housing starts from the previously reported total. The consensus estimate from a survey of economists expected a September rate of around 1.24 million.

Housing starts in October came in sharply lower than expected considering the downward revision of the September tally. Residential investment continues to be a weak spot in an otherwise strong U.S. economy.

For the first nine months of the year, total starts are up 5.6% on a non-seasonally adjusted basis and single-family starts are up 5.5%. Construction of buildings with 5 or more units is up 5.9% over the same period.

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Single-family housing starts slipped month over month by 16,000 in October to 865,000. The decrease primarily reflects a month-over-month decline of 18,000 in the South.

The seasonally adjusted rate of new building permits slipped to 1.263 million, down 0.6% from the revised September rate of 1.27 million and 6% lower than the October 2017 rate.

Permits for new single-family homes dropped month over month in October from a revised annual rate of 854,000 in September to a seasonally adjusted annual rate of 849,000. The rate decreased by 0.6% year over year.

Multi-family starts for buildings with 5 or more units decreased by 17.2% year over year in October and were flat compared with September. This number is more volatile than the single-family number and has been moving mostly sideways since 2013.

In 2017, 1.202 million housing units were started, up 2.4% compared with 2016, and a 10-year high. An estimated 1.263 million permits were issued in 2017, up 4.7% year over year.

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