U.S. housing starts rose a larger than expected 4.9% to 1.53 million annualized in October. The prior month's gain was revised up to 6.3%, and starts are now up 14.2% y/y. Construction rose in 3 of the 4 major regions, falling only in the Northeast. While building permits disappointed with a flat print (1.545 million), they remain 2.8% above year-ago levels.

It's no surprise that single starts led the way with a 6.4% advance in October, while multiples were unchanged for a second straight month. Singles are up 14.0% since February, while multiples are down 34.1%. Demand for detached homes has been driven by both record-low borrowing costs and remote workers looking for larger and cheaper living space away from inner cities.

Housing has proven to be one of the most resilient sectors in the pandemic. Sales of new homes are at 14-year highs, while available supply (at the current sales rate) is at all-time lows of 3 1/2 months. Construction looks to stay strong for a while, as homebuilder activity spiked to new heights in November. Still, we expect housing activity to moderate somewhat in the year ahead, as recent activity also reflects pent-up demand from the spring shutdowns.

Table 1 - United States — Housing Starts, Building Permits

(millions of units : a.r.)

Source: BMO Economics, Haver Analytics

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