Housing Production Takes a Breather

Housing starts fell 3% in November but from an elevated level in September and October. Single-family starts declined 4.1% also adjusting from what may have been a momentary surge in September and October as builders try to restock very low inventory levels. The interpretation is further supported by a 3.6% rise in permits, an indicator of future construction activity.

 
The first two months of the fourth quarter have averaged 875,000 starts up 13% from 774,000 in the third quarter. Single-family construction is up 6% and multifamily up 30% last two months compared to third quarter.

 
The mix between single-family and apartment construction was also uneven. Multifamily apartment construction continued on the rise with units in buildings with 2 or more homes rising to 296,000 on a seasonally-adjusted annual basis. And, permits for the same category rose to 334,000 or 10.6% above their October level. The demand for rental apartments has and will continue to support increases in this sector.

 
Single-family starts were mixed across regions rising in three regions but falling in the West. The east coast Sandy storm did not appear to affect total starts in the region, which fell 4,000 while US starts were down 27,000 (both on a SAAR basis).

 
The mixed results of single-family starts down but single-family permits virtually level support the conclusion of a pause rather than any suggestion of softness. Many hurdles remain, including access to credit, poor appraisals and competition with distress sales but the most likely path continues to be modest growth supported by low mortgage rates and a slowly recovering labor market.

Regional Housing Starts

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8 Responses to Housing Production Takes a Breather

  1. […] level of a year ago and stands 57% higher compared to the trough in mid-2009. A softer reading on single-family housing starts might point to some potential weakness in spending on this category going forward, but a 2-point […]

  2. […] level of a year ago and stands 57% higher compared to the trough in mid-2009. A softer reading on single-family housing starts might point to some potential weakness in spending on this category going forward, but a 2-point […]

  3. […] While total housing starts as reported by the Census Bureau fell 3% for the month, the first two months of the fourth quarter set a construction pace (an average of 875,000 starts rate) that is 13% higher than the rate of building in previous quarter. The starts rate for apartments in buildings with five or more units was up in November at a rate that is the highest since July 2008. […]

  4. […] Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 27,000 homes started over the past year, but this total has been increasing with the overall growth for housing starts. […]

  5. […] Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 27,000 homes started over the past year, but this total has been increasing with the overall growth for housing starts. […]

  6. […] Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 28,000 homes started during 2012, but this total has been increasing with the overall growth for housing starts. […]

  7. […] Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 28,000 homes started during 2012, but this total has been increasing with the overall growth for housing starts. […]

  8. […] Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 28,000 homes started during 2012, but this total has been increasing with the overall growth for housing starts. […]

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