Data released on Wednesday showed an increase in Housing Starts by 4.9% in October to 1.53 million (annual rate). All of the strength in starts has come from single-family homes, reflecting the ongoing quest for space, explained analysts at Wells Fargo.
Key Quotes:
“Housing starts once again topped expectations, with overall starts climbing 4.9% in October, following an upwardly revised 6.3% rise the prior month. Single-family starts accounted for all of October’s increase, with starts rising 6.4% to a 1.179-million unit pace. October marks the sixth consecutive increase for single-family starts, which are now at their highest level since April 2007.”
“The move to suburban markets is not limited to single-family homes. Data on asking rents suggests there has been a clear shift in renter preferences away from urban/lifestyle apartments for suburban apartments that offer more outdoor amenities.”
“There is still an immense undersupply of all types of housing, particularly affordable rental housing. The latest Residential Vacancies and Homeownership survey data showed another huge drop in renter households during the third quarter. We suspect the big drop was due to survey issues, with in-person surveys well below their norms from March to August. The problem was amplified by the exodus of younger renters from large urban markets, many of which moved back home with parents and worked remotely from there. This made it difficult to do telephone surveys. We expect apartment demand to ramp back up once the pandemic is comfortably behind us.”
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