More Single-Family Homes Are on The Way

October 20, 2016

Builders started on more single-family homes last month, boosting production by 8.1 percent to a seasonally adjusted annual rate of 783,000 units, the Commerce Department reported this week.

“Single-family starts posted their highest level since February and are consistent with builder sentiment, which has remained firm in recent months,” says Ed Brady, chairman of the National Association of Home Builders. “Low mortgage rates, along with solid permit and job growth should keep demand for single-family housing moving forward in the months ahead.”

Further, single-family permits – a gauge of future production – also posted gains in September, led by increases in the Northeast and Western regions.

While single-family starts fared well in September, multifamily production plummeted, which brought overall housing starts down 9 percent, the Commerce Department reports. Multifamily production dropped 38 percent month-over-month to 264,000 units.

"After strong readings during the summer, multifamily production pulled back in September," says NAHB Chief Economist Robert Dietz. "Still, we expect the multifamily sector to post a good year in 2016, though down a bit from last year, which was likely the peak year for this cycle."

Combined single- and multifamily starts dropped in three of the four regions last month: The Northeast, Midwest and South posted losses of 36 percent, 14.1 percent and 5.3 percent, respectively. Housing starts remained unchanged in the West.

Meanwhile, a future pick up in overall building looks bright for most regions. Permits rose 6.3 percent in September to a seasonally adjusted annual rate of 1.23 million. Permits rose by 23.6 percent in the Northeast, 15.8 percent in the West, and 2.6 percent in the South. The Midwest, on the other hand, posted a 5.2 percent decrease in permits.

Source: National Association of Home Builders