US home construction improved a slight +1.5% in October, but ground breaking for single-family houses fell.
The US Commerce Department said Tuesday US housing starts rose to a seasonally adjusted annual rate of 1.23 million, up from 1.21 million in September. The gains came entirely from apartments. Starts for single-family houses slipped -1.8% last month.
Permits, an indicator of future activity, declined 0.6% to an annual rate of 1.26 million.
On a year-to-date basis, single-family starts are +5.5% higher as of October relative to the first ten months of 2017. Single-family permits, a useful indicator of future construction activity, were slightly lower at -0.6% in October and have registered a -0.6% loss thus far in 2018 compared to last year.
The pace of single-family starts meanwhile,
which use much more wood per unit than multi-family building, posted a slight monthly decline in October, decreasing -1.8% to a seasonally adjusted annual rate of 865,000. September and August single-family starts were revised up totaling to an additional 21,000 units.
The weaker conditions for single-family construction are likely to continue, as noted by the November decline of the NAHB/Wells Fargo Housing Market Index, by eight points, now registering a score of 60.
Tuesday’s data also suggested that housing supply is likely to remain tight in the near term. US homebuilding completions in October fell -3.3% to a rate of 1.111 million units, the lowest level since September 2017.
The stock of housing under construction rose +0.5% to a more than 11-year high of 1.137 million units last month. The multi-family homes segment made up just over half of housing inventory under construction last month.
Multifamily starts (2+ unit production) posted an increase of +6.2% in October to a 343,000 annual rate. After a strong start to the year, multifamily development is moving closer to our forecast of levelling-off conditions. On a year-to-date basis, multifamily 5+ unit production is +5.9% higher thus far in 2018, while multifamily 5+ unit permitting is trending lower with a decline of -0.2%year-to-date increase relative to 2017.
Elsewhere, US existing home sales
increased in October after six straight months of decreases, according to the National Association of Realtors® Wednesday. Three of four major US regions saw gains in sales activity last month.
Total US existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.4 percent from September to a seasonally adjusted rate of 5.22 million in October. Sales are now down -5.1% from a year ago (5.5 million in October 2017).
Total housing inventory at the end of October decreased from 1.88 million in September to 1.85 million existing homes available for sale, but that represents an increase from 1.80 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, down from 4.4 last month and up from 3.9 months a year ago.
US existing homes-for-sale inventory was up +2.8% year-over-year in October compared to October 2017.
Months of supply was at 4.3 months in October. Sales through October (first ten months) are down about -2.1% from the same period in 2017.
Read more at: https://www.calculatedriskblog.com/#4hGK8XsaIUE9p2YJ.99