At a 1.5 percent increase from September, October housing starts ticked up, according to the Commerce Department. Combined, housing starts totaled 1.228 million, with 343,000 multifamily (five units or more) starts and 854,000 single-family starts.
On an annual basis, ground-breaking decreased 2.9 percent.
Approvals for builds decreased 0.6 percent to 1.263 million permits, but approvals for single-family starts were down 0.6 percent to 849,000. Approvals for multifamily came in at 376,000.
Completions followed suit, down 3.3 percent to 1.111 million. Completions in the single-family space slumped 1.2 percent, to 842,000, and completions on multifamily totaled 269,000.
“The housing market may still be suffering a hangover from a stormy September marked by deep disruptions in the all-important Southeast region — leading indicators for the Southeast were particularly weak again in October,” said Aaron Terrazas, senior economist at Zillow, in a statement. “But last month’s weakness was broad-based and today’s October starts and permits data, despite some residual storm effects, gives us a clearer view into how builders nationwide are beginning to react and adjust to a housing market that is undeniably shifting under their feet.
“By not overextending themselves in response to red-hot demand over the past few years, many builders could be well-positioned to be more strategic in response to a market that’s likely to hinge more on local factors than national trends over the next few years,” he continued. “We can expect to see more builder investment in relatively affordable areas with strong economic fundamentals and good underlying demand, even as builders may begin to pull back from pricier markets and/or those with less diverse economic bases.”
“This month’s decrease in single-family starts isn’t a surprise given the drop in our builder confidence index,” says Randy Noel, chairman of the National Association of Home Builders (NAHB), in an NAHB Now update. “Builders are showing caution as mounting housing affordability concerns are forcing some consumers to delay making a home purchase.”
“Single-family starts were strong at the beginning of the year, but weakened this summer and have remained soft,” said NAHB Chief Economist Robert Dietz. “Despite this softness, 2018 construction volume is set to be the best since the downturn. A growing economy and positive demographic tailwinds are supporting housing demand as interest rates rise. However, policymakers should take note of the November decline in builder confidence as a sign that housing affordability conditions will weigh on the housing market going forward.”
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