According the U.S. Department of Housing and Urban Development and the Commerce Department, led by impressive gains in both single-family and multifamily production, nationwide U.S. housing starts surged 25.5 percent in October 2016 to a seasonally adjusted annual rate of 1.32 million units.
Single-family starts reached their highest level since October 2007 while multifamily production jumped 68.8 percent from the previous month.
"These robust figures correlate with strong builder optimism in the housing market," said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Bloomington, Ill. "A firming job market, a growing economy and rising household formations will keep the housing recovery on track into next year."
"Multifamily production bounced back after an unusually weak reading last month while single-family starts exhibited unusually strong growth as well," said NAHB Chief Economist Robert Dietz. "Though October's single- and multifamily production rates are clearly unsustainable, we expect continued growth in the housing sector in the months ahead."
Single-family starts rose 10.7 percent in October to a seasonally adjusted annual rate of 869,000 units while multifamily production climbed 68.8 percent to 454,000 units.
Combined single- and multifamily starts posted double-digit gains in all four regions in October. The Northeast, Midwest, South and West increased 44.8 percent, 44.1 percent, 17.9 percent and 23.2 percent, respectively.
Overall permit issuance edged up 0.3 percent to a seasonally adjusted annual rate of 1.23 million in October. Single-family permits rose 2.7 percent to a rate of 762,000, while multifamily permits fell 3.3 percent to 467,000.
Permit issuance increased 12.1 percent in the Midwest and 7.5 percent in the West. Meanwhile, the Northeast and South posted respective losses of 21.1 percent and 2.4 percent.
NAR Chief Economist Lawrence Yun' also commented on the report saying, "Housing starts soaring past the 1.3 million mark for the first time since 2007 is big and welcoming news. The choke point of the housing market growth potential has been the lack of supply. The consequent tight inventory conditions has been pushing up home values to rise at faster rate than income growth over the past four years. This in turn has hurt affordability and contributed to the homeownership rate dipping to a 50-year low."
Yun concluded, "Now that supply is improving, future price growth should taper a bit. There is no oversupply threat and even more construction is still needed to help relieve housing shortage. Let's hope the rising construction activity continues."