Housing Starts

October 20th, 2015 8:59 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

Housing starts rebounded to a higher-than-expected level of 1.206 million units annualized in September, led by a jump in multi-family starts.  In fact, both starts and permits were essentially flat for single-family homes last month (at 740K and 697K respectively).  The traditionally less volatile single-family sector has been on a solid uptrend for quite a while.  After a spike in July, single-family starts settled in August and September.  Still, the quarterly averages over the past year are: 700K in Q4 of 2014, a weather-related dip to 643K in Q1, a rebound to 706K in Q2, and a further rise to 746K in Q3, a 14% gain over the Q3 average a year ago.  In short, even with a “mere” flattish reading in September, single-family starts remain on a pretty steep upward track.

Meanwhile, the multi-family figures did in September what they do best: gyrate.  Multi-unit starts surged by 18% to 466K, not entirely surprising given that multi-unit permits had been 450K or higher in both July and August.  At the same time, multi-unit permits sank last month to 406K, suggesting that a pullback in multi-unit starts in October is extremely likely.

As always, there is a lot of noise in these data, but the underlying story is that housing demand is quite strong, and builders are slowly but surely ramping up their groundbreaking to meet the need.  Realtors regularly complain about shortages of inventories of both new and existing homes in many markets, acute shortages in some places.  Builders are stepping up to meet that demand but doing so cautiously.  The number of units completed in September was the highest since 2008, as was the number of units under construction.  So, for beleaguered buyers who can’t find what they are looking for because of a dearth of listings, there is a bit of help on the way.  In terms of economic growth, housing will be a supportive sector, though it is simply not big enough to carry the economy on its back, as it did in the mid-2000s.  Nonetheless, the household sector, the combination of consumption and housing growth, is proving strong enough to drive decent GDP growth (not dynamic, but well above the new lower potential rate), despite lackluster demand from businesses and a drag from overseas.

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  1. 2 Responses to “Housing Starts”

  2. By fredy on Oct 20, 2015 | Reply

    thank you JJJ for the updates, in many ways your blogging are better than some broker updates 🙂

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