Permits Strong in Mixed Housing Report
THURSDAY, NOVEMBER 19, 2015
More single-family home construction permits were issued in October than in any month in the past eight years, according to new home construction data released Wednesday (Nov. 18).
Overall, analysts said that the new report released by The U.S. Census Bureau and Department of Housing and Urban Development suggests a strong housing market, despite the mixed data that also showed fewer houses actually broke ground.
Building permits increased 1.5 percent in October compared to the revised September reports, according to the agencies’ joint statement. Permits in October reached 1.15 million, which also is 2.2 percent higher than the 1.12 million permits issued in October 2014.
According to Bloomberg, the pace of building permits—a sign that new construction will pick up in the months ahead—was the strongest in October since December 2007.
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Permits for new home construction reached an eight-year high in October, but housing starts dropped over the previous month and year, reports suggest. |
“Housing is still really in a slow grind higher, and at the very least it’s stable,” Gennadiy Goldberg, U.S. rates strategist at TD Securities LLC in New York, told Bloomberg. “Ongoing strength in permits is really a hint that you are going to get more construction.”
Starts Decline
At the same time, the report indicated that privately owned housing starts in October fell to their lowest level in seven months. Seasonally adjusted rates indicated that 1.06 million new houses began construction in October, which is 13.5 percent below the revised September starts of 1.19 million.
Housing starts in October also fell 11.5 percent compared with the same time last year, the report indicated.
Still, analysts agreed that the U.S. housing market appears to be on solid ground.
“We’re confident that the broader housing market recovery will continue,” Tom Wind, executive vice-president of home lending at EverBank in New York, told Reuters.
The biggest drop in housing starts was in the multifamily category, according to reports. New privately owned housing buildings with five or more units fell 25.5 percent compared to starts in September and 40 percent compared to October 2014.
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Multifamily housing took the biggest hit, in contrast with September data, where it showed the biggest improvement. Builder confidence also dropped slightly, according to the NAHB.   |
The numbers reflect a significant change compared to multifamily starts in September, which were up 17 percent compared to the month prior.
Three of the four regions showed an increase in single-family detached homes, with the South being the only region to drop at 6.9 percent. For total units, the report indicates that the Northeast and the Midwest both saw increases at 10.2 percent and 7 percent respectively. The West saw a 16.2 percent loss in total starts, while the South led the group with 18.6 percent fewer total privately owned homes breaking ground.
Confidence Slips
Not all of the news this week about new housing construction was rosy. In a separate report released Tuesday (Nov. 17), the NAHB said builder confidence dropped three points to 62 on the NAHB/Wells Fargo Housing Market Index (HMI).
The NAHB had reported in September that the rate for that month had returned to figures seen at the end of the housing boom in late 2005.
“The November report is pullback from an unusually high October, and is more in line with the consistent, modest growth that we have seen throughout the year,” said NAHB Chief Economist David Crowe.
“A firming economy, continued job creation and affordable mortgage rates should keep housing on an upward trajectory as we approach 2016.”
Tagged categories: Building Envelope; Construction; Department of Commerce; Government; Housing; Housing starts; Multifamily
