November 17, 2023 | 09:23
It's Still Hammer Time in October
Housing starts unexpectedly climbed 1.9% to 1.372 mln a.r. in October. That marks a second straight monthly increase even as September was revised lower. Construction of single-family units edged up 0.2% while volatile multis climbed 6.3%. Starts in the West and the Midwest gained though the Northeast and South posted declines. Despite multiple headwinds for U.S. homebuilders, the one saving grace is limited inventory in the resale market. That has pushed potential buyers to look at new construction as a viable option, with builders adding on extra incentives.
Building permits, a good proxy for future home construction, also confounded expectations, rising 1.1% to 1.487 mln annualized. Permits have been trending higher this year after tumbling to the lowest since the summer of 2020 in January. And, that’s despite homebuilder sentiment that continues to sour under the weight of elevated borrowing costs.
Bottom Line: Housing starts and building permits both surprisingly climbed in October, suggesting builders may be benefitting from lack of supply in the resale market. Looking ahead, however, homebuilding activity is unlikely to gain significant traction amid an expected stall in the economy early next year.