According to new data from the U.S. Housing and Urban Development and Commerce Department, total housing starts increased 3.8 percent in October 2019 to a seasonally adjusted annual rate of 1.31 million units.
The October reading of 1.31 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.0 percent to 936,000 units. The multifamily sector, which includes apartment buildings and condos, increased 8.6 percent to a 378,000 pace.
"Home builders are seeing more building opportunities as market conditions remain solid," said Greg Ugalde, chairman of the National Association of Home Builders (NAHB). "Builder sentiment remains strong, and we are seeing an uptick in buyer traffic."
"Led by lower mortgage rates, the pace of single-family permits has been increasing since April, and the rate of single-family starts has grown since May," said NAHB Chief Economist Robert Dietz. "Solid wage growth, healthy employment gains and an increase in household formations are also contributing to the steady rise in home production."
On a regional and year-to-date basis, combined single-family and multifamily starts in October are 6.8 percent higher in the South. Starts are down 0.5 percent in the Northeast, 7.4 percent in the Midwest and 10.3 percent in the West.
Overall permits, which are a harbinger of future housing production, increased 5.0 percent to a 1.46 million unit annualized rate in October. Single-family permits rose 3.2 percent to a 909,000 rate while multifamily permits increased 8.2 percent to a 552,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 9.2 percent higher in the Northeast and 5.2 percent higher in the South. Permits are down 5.0 percent in the Midwest and 1.4 percent in the West.
The National Association of Realtors Chief Economist Lawrence Yun also commented, "Tremendously good news for the housing sector: the issuance of housing permits booming ahead to their highest level in over a decade. At 1.46 million units on an annualized basis, housing permits are nearly to the level needed for the country over the long haul. Since new home construction kicks off the chain reaction of people trading-up and trading-down by buying new and selling their existing homes, more housing inventory will surely show up in the market next year."
Yun continues, "Permits are just paper, while housing starts are shovels in the ground -- and permits generally lead starts. At the moment housing starts have made a gain, though not as dramatically. At 1.31 million units in October, they are still a bit light compared to the demand for housing. Directionally though, it is still good news as these October figures are 8.5% higher than a year ago. This growth is also contributing to broader GDP growth and therefore diminishes the chances of an economic recession in 2020. Let's root for even greater production in the upcoming months."