Housing starts up
Single family housing starts rose 3.9 percent in October according to the U.S. Commerce Department, improvement that was masked by an 8.3 percent drop in multifamily starts that kept national housing production essentially flat in October up only 0.3 percent. Single family home permits issued rose to its fastest pace since December 2010, up 5.1 percent for the month, a forward-looking economic indicator that we use to consider what starts will look like in the future. The multifamily sector saw a 24.4 percent increase in permits issued, hinting at a continuing multifamily rollercoaster of volatility.
Housing starts for single family combined with multifamily was up 17.2 percent in the Northeast, 9.7 percent in the Midwest and 1.6 percent while starts dropped 16.5 percent in the West. Permits dropped in the Northeast 1.6 percent and 3.7 percent in the Midwest but rose 5.4 percent in the West and 21.5 percent in the South.
Recovery may not be imminent
“The government’s numbers for October housing production are very much in keeping with what home builders have been telling us in our recent surveys,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “While we still have a long way to go toward a recovery, some signs of hope are emerging in certain markets where economic and job growth is occurring and where foreclosures have not been an overwhelming obstacle.”
“The three-month moving averages for both housing production and permitting activity have been gradually rising since this spring, which is consistent with our forecast for slow improvement in market conditions through the end of this year and a positive sign that a more solid recovery will begin to take hold in 2012,” said NAHB Chief Economist David Crowe. “That said, the improvements we are seeing are still limited to scattered local markets where economies are improving, and obstacles such as tight credit conditions for builders and buyers, appraisal issues stemming from new homes being compared to distressed properties, and consumer concerns about job security are definitely slowing the progression of both a housing and economic recovery.”