Housing Starts Continue To Baffle Experts, Trend Is Upward

Single-family starts displayed continued growth in September, according to the latest report from the Commerce Department. Overall housing production increased 1.9 percent to a seasonally adjusted annual rate of 1.42 million units.

The September reading of 1.42 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 8.5 percent to a 1.11 million seasonally adjusted annual rate—the highest pace of single-family starts since June 2007. The multifamily sector, which includes apartment buildings and condos, decreased 16.3 percent to a 307,000 pace.
Regionally, combined single-family and multifamily starts are 11.0 percent higher in the Midwest, 5.7 percent higher in the South, 4.5 percent higher in the West and 1.4 percent lower in the Northeast.

The Breakdown:

Housing Starts: 1,415,000 (+1.9 percent month-over-month, +11.1 percent year-over-year)
Multifamily Permits: 295,000
Single-Family Permits: 1,108,000

Building Permits:
 1,553,000 (+5.2 percent month-over-month, +8.1 percent year-over-year)
Multifamily Permits: 390,000
Single-Family Permits: 1,119,000

 1,413,000 (+15.3 percent month-over-month, +25.8 percent year-over-year)
Multifamily Completions: 480,000
Single-Family Completions: 921,000

What the Industry Is Saying:

“When homes get built, jobs are created through multiple cascading effects. Aside from construction and trade contractors, lumber mills and moving trucks get going along with land developers and title companies. And of course, more inventory becomes available for consumers. That is why today’s data in surging housing starts is so welcome: moving the economy in a better direction. Homeownership will also rise with more choices.

“A gain of 8.1 percent from a year ago to 1.415 million new unit production (annualized) is good but far more units are needed. Housing permits, a precursor to starts, were better at 1.55 million. Rising lumber prices and a shortage of construction workers could present challenges. The country needs to boost vocational training to move workers who lost jobs in retail, restaurants, and hotels into the higher paying construction industry.” — Dr. Lawrence Yun, National Association of REALTORS® Chief Economist

“Mortgage interest rates near record lows continue to propel the housing industry, including construction. There has been a surge of demand for new homes as a result of the longstanding inventory constraints across the country. Today’s news is encouraging for those enduring bidding wars and other challenges in the current market.” — Bill Banfield, Rocket Mortgage Executive Vice President of Capital Markets

“The housing market remains a bright spot in the U.S. economy, and this is reflected in today’s positive housing starts report. Builder confidence is at an all-time high as buyer traffic is strong-another sign that housing is helping to lift the economy.” — Chuck Fowke, Chairman, National Association of Home Builders

“Home sales have exceeded for-sale home construction recently, which means additional home building in the near term. Demand is being supported by low interest rates, a suburban shift in demand and demographic tailwinds. However, headwinds due to limited building material availability is slowing some construction activity despite strong demand, with authorized but not started single-family homes up 22.4 percent compared to a year ago.” — Robert Dietz, Chief Economist, National Association of Home Builders