Data released today showed that housing starts rose 3.8% in October, to a 1.31 million (annual rate) and building permits jumped 5%. Analysts at Wells Fargo point out that new residential construction continues to gradually creep higher amid lower mortgage rates, firming demand and rising builder optimism.
Key Quotes:
“Housing starts rose 3.8% in October to a 1.314 million-unit pace, roughly in line with expectations and 8.5% stronger than October last year. Still, the headline numbers have been nothing to write home about in recent months””on a non-seasonally adjusted year-to-date basis, starts are running 0.6% below last year’s pace, and October was only the second monthly increase in overall starts in the past six months.”
“The single-family data tell a more positive story. Although down 1.3% compared to the same period last year, single-family starts have risen five of the past six months. The trend is clearly improving””the 2.0% rise in October brought single-family starts to a 936,000-unit pace, the strongest since January.”
“Permits handily beat expectations, rising 5.0% to a 1.461 million-unit pace, the strongest since May 2007 and 14.1% above the pace from October last year”.
“Builders remain confident””the NAHB/Wells Fargo Housing Market Index, a forward-looking measure of the single-family market, declined one point to 70 in November, but remains at healthy levels, particularly compared to the end of last year when it fell to 56. The slight decline follows four consecutive increases, and the index continues to point to “ongoing positive conditions, spurred in part by low mortgage rates and continued job growth.”
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