October Housing Starts Tumble
Housing starts fell by 11 percent in October, more than expected, HUD and the Census Bureau announced yesterday.
The report said privately owned housing starts came in at a seasonally adjusted annual rate of 1.060 million October, down by 11.0 percent from September’s revised 1.191 million and 1.8 percent from a year ago (1.079 million). Single-family housing starts totaled 722,000; 2.4 percent lower than September’s revised 740,000. The October rate for units in buildings with five units or more was 327,000, down by 25.5 percent from September (439,000).
Starts fell in the key South and West regions. In the South, starts fell by 18.6 percent in October to 506,000 units from September’s revised 622,000 and fell by 15.1 percent from a year ago. In the West, starts fell by 16.2 percent in October to 253,000 units from September’s revised 302,000 but increased by 14.5 percent from a year ago. In the Northeast, starts increased by 10.2 percent to 140,000 units in October from September’s revised 127,000 and increased by 40 percent from a year ago. In the Midwest, starts rose by 15.0 percent to 161,000 units in October from September’s revised 140,000 but fell by 0.6 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., called October’s results disappointing, but noted that the weakness could be “largely transitory and more reflective of the noisy series than a sign of an impending slowdown.”
“Multifamily starts are notoriously volatile, and looking at longer-term trends can be more instructive than the month-to-month changes,” Vitner said. “Multifamily starts are up 10.4 percent year-to-date from the same period in 2014, which is more indicative of the recent strength seen in the multifamily sector.”
Vitner added that a decline in October starts was expected, largely a result of the drop in September permits. “Despite October’s moderation in starts, 2015 is still shaping up to be a better year for housing, with total year-to-date starts jumping 10.2 percent from a year ago,” he said. “Winter months often contain additional volatility because of the exaggerated impact of the seasonal-adjustment process. The bulk of actual home building occurs during warmer months. El Niño should be a modest positive for reported starts in coming months.”
The report said privately owned housing units authorized by building permits in October rose to 1.150 million, 4.1 percent higher than September’s revised 1.105 million and 2.7 percent higher than a year ago (1.120 million). Single-family authorizations rose by 2.4 percent to 711,000; authorizations of units in buildings with five units or more rose by 8.3 percent to 405,000.
Privately owned housing completions fell to 965,000, 6 percent lower than September’s revised 1.027 million but 5.2 percent higher than a year ago (917,000). Single-family housing completions in October fell by 0.5 percent to 640,000; the October rate for units in buildings with five units or more fell by more than 15 percent to 318,000.
