US: Housing starts improve modestly in October - Wells Fargo

Data released today showed that Housing Starts rose 1.5% in October in the US, recovering from a slide of %% in September. Building permits dropped 0.6%. Analysts at Wells Fargo point out that permits are running ahead of starts but all the overshoot is in multi-family units.

Key Quotes: 

“Housing starts rose modestly in October, with overall starts rising 1.5%. All of the gain, however, came from multifamily units, which jumped 10.3%. Most of that gain was in projects with five or more units, which rose 6.2% and are primarily apartment projects. Starts of single-family homes fell 1.8% in October, marking their second consecutive drop.”

“Permits for single-family homes fell 0.6% in October and are running below starts, indicating that single-family starts are likely to continue to lose momentum in coming months.”

“Permits for new single-family homes through the first ten months of the year are running 5.7% ahead of their year-ago pace but are running 3.4% below starts, again suggesting the single-family market will continue to lose momentum.”

“The weakness in the single-family market is being offset somewhat by continued strength in multi-family units.”

“The multi-family market is the polar opposite of the single-family home market. Permits for projects with five or more units through October are running roughly even with their year-ago pace but are running 11.7% above starts through the first ten months of 2018. With demand remaining strong, we could see a bit more strength in apartment starts in coming months, even as single-family starts continue to drop.”