SG: Eco Analysis - US Housing: Signs of life in residential construction activity (B. Jones)

Eco Analysis - US Housing: Signs of life in residential construction activity (B. Jones)
2011.11.17 08:39 AM

■ Housing starts and building permits eclipsed Street expectations in October

The Census Bureau reported that the number of new housing units started dipped by 0.3% to a seasonally adjusted annual rate of 628,000 in October, holding on to all but a fraction of September's reported 7.7% surge. The number of new building permits issued jumped by 10.9% to 653,000 the highest level since March 2010. The reported figures were considerably higher than the respective median consensus forecasts of 610,000 and 603,000.

■ Gyrations in multifamily figures were responsible for reported October swings

The modest pullback in headline starts was entirely attributable to an 8.3%, 18,000-unit, decline in new multifamily units commenced to 198,000. Conversely, the number of multifamily permits filed during the reference period jumped by 24.4%, or by 43,000 units, to 219,000, accounting for two thirds of the rise in new issuance.

■ Single-family building activity appears to be rising from the canvass

The most encouraging portions of this morning's report were the increases in single-family starts and permits posted in October. Consistent with the improvement in builder sentiment in last month's survey, single-family starts rose by 3.9% to a three-month high of 430,000. Meanwhile, the number of single-family permits issued jumped by 5.1% to 434,000 in October the strongest showing since last December. Looking ahead, the pickup in builders' spirits noted in the National Association of Home Homebuilders' November canvass hints at further increases in starts and permits in the current month (see accompanying chart).

■ Regional figures revealed mixed activity in October

With the exception of a 16½% (26,000) drop in the West to 132,000, housing starts climbed in all regions in October. The biggest absolute gain was posted in the Northeast, up by 10,000 to 68,000. In the Midwest, starts climbed by 9,000 to 102,000. Starts in the South edged 5,000 higher to 326,000, building on September's 20,000 gain.

Permits were decidedly mixed in October. New issuance soared by 62,000 to 350,000 in the South, while the West posted a 7,000 rise to 137,000. In the Midwest, permits slid by 4,000 to 103,000 and dipped by 1,000 to 63,000 in the Northeast.