U.S. Housing Starts Up Sharply, Near Post Market Crash Highs
According to the U.S. Department of Housing and Urban Development and the Commerce Department, nationwide U.S. housing starts rose 13.7 percent in October 2017 to a seasonally adjusted annual rate of 1.29 million units after a slight upward revision to the September reading. This is the highest housing production reading since October 2016, when total starts hit a post-recession high of 1.33 million.
Single-family production rose 5.3 percent in October to a seasonally adjusted annual rate of 877,000. Year-to-date, single-family starts are 8.4 percent above their level over the same period last year. Multifamily starts jumped 36.8 percent to 413,000 units after a weak September report.
"This uptick in housing production is aligned with our reports of strong builder confidence," said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. "Our members are optimistic about the future of the housing market, even as uncertainties remain and they continue to face supply-side issues."
"We are seeing solid, steady production growth that is consistent with NAHB's forecast for continued strengthening of the single-family sector," said NAHB Chief Economist Robert Dietz. "As the job market and overall economy continue to firm, we should see demand for housing increase as we head into 2018."
Regionally in October, combined single- and multifamily housing production rose 42.2 percent in the Northeast, 18.4 percent in the Midwest, and 17.2 percent in the South. Starts fell 3.7 percent in the West.
Overall permit issuance in October was up 5.9 percent to a seasonally adjusted annual rate of 1.3 million units. Single-family permits rose 1.9 percent to 839,000 units while multifamily permits fell 9.5 percent to 458,000.
Permits rose in all four regions. They increased 13.0 percent in the West, 4.1 percent in the Northeast, 3.8 percent in the Midwest and 3.0 percent in the South.
NAR's Chief Economist Lawrence Yun's reaction to the October 2017 housing starts data was the following, "The South region is quickly getting back on its feet with a big jump in new housing starts, after a pause in the prior month from the aftermath of the hurricanes. The Midwest and the Northeast regions also made gains. Only the West region, the very region that is most in need of new supply, experienced fewer housing starts.
Overall, the total activity for the country is moving in the right path. More supply will boost future home sales. The West region, however, could experience slowing job growth as affordability conditions worsen from the ongoing inventory shortages that are driving up prices. This could ultimately force residents and potential job seekers to start looking to other parts of the country."