October Housing Starts Rise, But Still Short of Expectations

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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.

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.