Housing Starts Up in October, Completions Soar

Housing starts rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000--the highest level since July 2008--but permits for new residential construction fell, the ""Census Bureau"":http://www.census.gov/ and ""Department of Housing and Urban Development"":http://portal.hud.gov/hudportal/HUD ""reported jointly"":http://www.census.gov/construction/nrc/pdf/newresconst_201210.pdf Tuesday.

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Housing completions soared in October, up 14.5 percent during the month to 772,000, the highest level since June 2010. The increase in completions was led by a 5.3 percent jump in multifamily completions. Single-family completions in October reached their highest level since June 2010, increasing to 542,000.

Permits and starts for September were revised lower, making the month-over-month percentage growth for starts stronger. Permits in October were down 2.7 percent from September to 866,000.

The report showed no impact of Hurricane Sandy, which ravaged the East Coast in the last few days of the month. The storm's impact is more likely to be felt in the report for November starts.

Economists had expected starts to drop to 836,000 from the originally reported September rate of 872,000 and permits to slip to 865,000 from September's 894,000.

Both total permits and starts showed strong yearly gains in October, with permits up 29.8 percent from last October and starts up 41.9 percent. Single-family permits are up 26.6 percent from October 2011, and single-family starts are up 35.3 percent.

The month-over-month improvement in starts came in the multi-family sector, as single-family starts were essentially flat at 594,000 in October (compared with September’s revised 595,000).

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The October jump in completions and starts supported the increase in builder confidence for that month as reported in the ""National Association of Home Builders'"":http://www.nahb.org/default.aspx Housing Market Index. The index ""gained one point"":http://dsnews.comarticles/stronger-traffic-boosts-builder-confidence-2012-10-16 in October and ""added another five points"":http://www.themreport.com/articles/builder-confidence-surges-in-november-2012-11-19 in November.

Starts continue to show long term improvement, averaging 783,000 per month in the last six months compared with 606,000 for the same six months last year. Despite the slight dip in October, single-family starts remain on an upward trajectory, averaging 546,000 per month in the last six months compared with 427,000 per month in the same six-month period a year ago.

Permits too have surged, averaging 819,000 per month for the last six months compared with 635,000 for the same six months in 2011. Permits for single-family construction have averaged 519,000 per month in the last six months compared with 424,000 per month for the same period a year ago.

Multifamily starts rose in October to 300,000, the highest level since July 2008, while multifamily permits fell to 304,000 after hitting a four-year high at 340,000 in September.

The surge in completions--the strongest monthly gain since February 2011--could be the cause or reflection of builder optimism, though completions continue to outpace new home sales. Total completions have averaged 671,000 for the last six months, up from 592,000 in the same six months in 2011. Single-family completions averaged 495,000 in the last six months compared with 454,000 in the same period a year ago.

New home sales averaged 370,000 per month in the most recent six-month period, up from 303,000 per month in the same six months last year, so the gap between completions and sales--151,000 a year ago and 125,000 this year--is shrinking.

Single-family permits represented 64.9 percent of all permits in October, up from61.8 percent in September but down from 66.6 percent in October 2011. Single-family starts were 66.4 percent of all starts in October, down from 68.9 percent in September and 69.7 percent a year ago.

Total starts rose in two of the four census regions, improving 34,000 in the West to 232,000 and 13,000 in the Midwest to 159,000 while dropping 11,000 in the South to 431,000 and 5,000 in the Northeast to 72,000. Single-family starts also improved in the West and Midwest while falling in the South and Northeast.

Total permits rose month-over-month in the Midwest and South while falling in the Northeast and West, as did single-family permits.