Starts of new homes were up 3.8% in October from September to 1.314 million units (SAAR) and were up 8.5% compared to a year-ago. Starts of single-family homes rose 2.0% to 936,000 from the prior month and were up 8.2% from October 2018. Multi-units rose 8.6% to 378,000 in October and were up 9.2% from the year-ago month. Although multi-units can have an out-sized effect on the total, the increase for October is probably reflective of underlying conditions with solid demand for new homes and many in smaller sizes that makes up for a lack of supply in existing entry-level units which are often in townhomes and condos.
Regionally, starts were down sharply in the Northeast (down 21.9%) after two very strong months for new construction. Starts were up solidly for the Midwest (up 8.7%) and continuing the recent trend. Starts were up sharply for the West (up 17.6%) as consumers likely decided that low mortgage rates were a window of opportunity into homeownership. Starts were narrowly higher in the South (up 0.7%) and more-or-less on trend there.
Permits issued caught up again after slowing in the prior month. Permits increased 5.0% to 1.461 million units (SAAR) in October from September and gained 14.1% compared to October 2018. There’s still plenty of demand in the pipeline to keep construction going well into the start of winter. Permits for single-family homes were up 3.2% to 909,000 and were the highest since 916,000 in August 2007 and touching on pre-crisis levels. Multi-unit permits were up 8.2% to 552,000 from the prior month and jumped 26.9% from a year-ago. There is plenty of demand for other types of housing than single-family homes.
Permits issued were up across all four regions. The strongest gain was 19.5% in the Northeast, followed by 5.6% in the South, 1.7% in the Midwest, and 0.8% in the West.
The strong labor market is giving consumers the confidence to purchase a home while low mortgage rates are improving affordability even with prices continuing to rise modestly. Rates have moved slightly higher from recent lows but are are still at levels that can tempt buyers, especially if they are concerned about higher rates in the future.
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