SG: Eco Analysis - US Housing Activity: Multifamily mayhem (B. Jones)

Eco Analysis - US Housing Activity: Multifamily mayhem (B. Jones)

■ Powered by a surge in multifamily activity, housing starts jumped to 17-month high

The number of new housing units started jumped by 15.0% to a seasonally adjusted annual rate of 658,000 in September, following upward-revised tallies of 615,000 in July and 572,000 in August. The reported figure exceeded the consensus expectation (590,000) by a country mile and represented the strongest activity since April 2010 (687,000). Reflecting solid demand for rental dwellings, multifamily starts soared by 51.3% to 233,000, accounting for all but a fraction of last month's rise. Single-family starts, climbed by a comparatively modest 1.7% to 425,000, essentially matching the July-August average.

■ A reported pullback in multifamily issuance, however, left permits at a five-month low

The number of building permits issued retreated by 5.0% during the reference period to 594,000 the lowest figure since April (563,000). What the multifamily segment provided to starts, it tooketh away from permits in September. The number of multifamily permits filed dropped by 14.5% (30,000) to 177,000, accounting for virtually the entire slide in issuance last month. Single-family permits dipped by just 1,000 to 417,000.

■ All areas of the country posted increased starts in September

The reported jump in housing starts was broad based during the reference period. Buoyed by the aforementioned strength in multifamily building, starts jumped by 18.1% in the West to 163,000 and by 15.7% to 339,000 in the South. Increased single-family construction boosted starts in the Northeast by 12.7% to 62,000 and by 9.3% to 94,000 in the Midwest.

■ Permits figures were spotty across geographic locations

The number of new building permits issued posted gains in the Midwest (+0.9% to 108,000) and the Northeast (+4.9% to 64,000), but fell by a fair amount in the South (-7.0% to 291,000) and the West (-9.0% to 131,000).

■ Looking ahead

The improvement in home-builder sentiment posted in October suggests both single-family starts and permits will rise in the current month. The multifamily data, however, likely will be mixed. While a pullback in starts from the break-neck pace witnessed in September id probable, we expect permits for such structures to resume their ascent in next month's report.