Housing Starts Finish 3rd Quarter on Strong Note
Housing starts posted a healthy 6.5 percent increase in September, HUD and the Census Bureau reported yesterday.
The report said privately owned housing starts in September came in at a seasonally adjusted annual rate of 1.26 million, 6.5 percent higher than August revised estimate of 1.132 million and 17.5 percent higher than a year ago. Single-family housing starts in September came in at 740,000; 0.3 percent higher than August (738,000). The September rate for units in buildings with five units or more was 454,000, 17 percent higher than August (388,000).
Regionally, results were mixed. In the South, housing starts rose by 0.6 percent in September to 621,000 units, seasonally adjusted, from 617,000 in August and improved by 23.2 percent from a year ago. In the West, starts rose by 25.4 percent in September to 311,000 units from 248,000 in August and improved by 27.5 percent from a year ago. In the Northeast, starts rose by 23.4 percent in September to 137,000 units from 111,000 in August and improved by 25.7 percent from a year ago. In the Midwest, starts fell by 12.2 percent to 137,000 units in September from 156,000 in August and fell by 18.9 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said housing is one area of the economy that can continue to improve even if the rest of the economy slows slightly.
“After housing starts had fallen in July and August, today’s report should help to allay concerns that the domestic expansion is faltering amid headwinds from overseas,” Vitner said. “Through the monthly volatility, the trend in housing remains upward.”
Vitner noted while multifamily construction drove the September increase, multifamily permits fell to their lowest level since March. “Apartment construction has reached a more mature phase of the real estate cycle,” he said. Single-family construction on the other hand continues to make slow but steady gains.”
The report said privately owned building permits in September fell by 5 percent to 1.103 million, but 4.7 percent higher than a year ago. Single-family authorizations fell by 0.3 percent to 697,000; authorizations of units in buildings with five units or more fell by 14.6 percent to 369,000.
Privately owned housing completions in September came in at 1.028 million, a 7.5 percent increase from August but 8.4 percent higher than a year ago. Single-family housing completions fell by 1.8 percent to 643,000; the September rate for units in buildings with five units or more was rose by 29 percent to 378,000.
“The September starts figures provide some added clarity on the current state of housing following the wind-down of distortions in the multifamily sector from tax changes and payback from a rainy spring in the key homebuilding state of Texas,” Vitner said. “Even as other parts of the economy have struggled more recently under the weight of slower global growth and a stronger dollar, housing has held up well.”
