Single-family housing starts came in above estimates in September, signaling sustained strength in the owner-occupied housing sector.
The U.S. Census Bureau and the Department of Housing and Urban Development (HUD) reports single-family starts in September at a rate of 738,000, or 8.1 percent more than the estimate of 724,000. Units in buildings with five units or more were at a rate of 250,000 over the same period.
Privately-owned starts, however, stumbled, down 9 percent at 1,047,000 from an estimate of 1,150,000 and below last September’s rate of 1,189,000—an 11.9 percent decline. Single-family housing completions, in addition, fell 8.8 percent below estimates in September, at 687,000 from 753,000. Privately-owned completions also moved downward 8.4 percent, to a rate of 951,000 from the 1,038,000 estimate.
“[The September] data spawned some ominous headlines, but if you look closer this is actually a very encouraging report about new construction to come in the months ahead,” says realtor.com® Chief Economist Jonathan Smoke. “True, housing starts dropped—but we have to take that with a grain of salt because it came from such thin data. On the other hand, the permitting data released today blew by analysts’ expectations. It also showed that this year’s most troubling trend in new construction has clearly reversed: Permits are outpacing starts, which indicates that developers and builders are finally planning for more growth ahead. That’s great news for both the economy and the consumer.”
“The headline number in this month’s report doesn’t tell the full story,” says Bill Banfield, vice president at Quicken Loans, of the decline in privately-owned starts. “Single-family starts made significant gains in September, which is welcome news to a housing market that has continued to lack inventory, especially in entry-level sectors.”
“A persistent lack of growth in new construction has given us low vacancies in rentals and very low inventories of homes for sale,” Smoke adds. “That has produced above-average increases in rents and prices—but [the September] data is a good sign that we could be turning the page on this troubling scenario. Let’s hope this trend persists!”