Housing starts and housing permits for September showed a surprisingly strong growth. Overall starts increased 15% to an annualized rate of 872,000, the highest since July 2008. The increase was nearly universal with single-family starts increasing 11% to 603,000, the highest since August 2008, and multifamily increasing 25% to 269,000, the highest since September 2008. Three census regions also saw increase with only the Northeast reporting a decline of 5%.
Permits for both single- and multifamily homes were up 6.7% and 20.3% respectively, both best since July 2008. Permits were up in all regions for overall building types and for single-family homes. The number of single-family completions at 524,000 was the highest since the rush to respond to the home buyer tax credit in early 2010.
The extra building surge in September confirms the steady build-up in builder confidence that has increased for six consecutive months. Builders have been saying that the potential home buyers they see now are more serious about buying, which has increased builders confidence enough to start additional homes. Builder inventory of new homes for sale is at an all-time low so some replenishment of inventory is necessary if new homes are to remain competitive against the existing housing stock. Credit availability for home builders has been a significant constraint against building inventory, but some modest relaxation may have helped this situation.
Even with the strong September report from Census and HUD, total housing construction remains at less than half a normal market output as many consumers remain on the sidelines or have insufficient credit or income to make that leap. As consumer confidence rises and jobs return, more local markets and more consumers will join the buyer market and I expect housing construction to continue a modest but fairly steady rise throughout 2013 and into 2014.