The US September home building data, released Tuesday, continued to represent the shift toward single-family homes and away from condos and apartments as buyers seek more space and larger homes since the COVID-19 quarantines.
The pace of housing starts rose by 1.9% to a 1.415 million annual rate, below the 1.451 million pace expected and only partially recovering from 6.7% decline in the previous month. Single-family starts rose by 8.5%, while multi-family starts fell by 16.3%.
Building permits, which precede starts activity, rose by 5.2% to a 1.553 million pace, with single-family permits up 7.8% and multi-family permits down 0.9%. As a result, single-family starts are likely to accelerate further in October.
Homes under construction were flat at a 1.209 million rate in September, but completions jumped by 15.3% to a 1.413 million rate. New homes for sale have been in severely short supply relative to demand, driving up prices. The jump in completions this month is a step forward to relieving that imbalance.
US Home Building Data
Source: US Census Bureau
There are some indications that the building trend will continue upward.
Homes damaged or destroyed by the hurricanes and wildfires that have impacted regions of the country will need to be replaced, adding to the homebuilding statistics in the coming months.
The National Association of Home Builders sentiment index released on Monday rose to a record level of 85 in October from 83 in September, with measures of both current and future activity up sharply. The NAHB noted shortages of land, supplies and labor have kept supply below the level needed to offset demand.
In other data released on Tuesday, the Philadelphia Fed’s non-manufacturing index rose to 16.0 in October from 8.0 in September, indicating more widespread expansion.
This is the first services indicator released for the month, but it’s a good start. Other services data will be released over the next few weeks, starting with reports from the Kansas City Fed and Markit on Friday.