U.S. housing starts rise in line with expectations in October

Housing starts in the U.S. grew 3.8 percent to 1.31 million units in the month of October, following the fall of 7.9 percent in September. This is close to market expectations of a rise of 5.1 percent. The rise was widespread, with both single and multi-family starts coming in higher. Single-family starts rose 2 percent to 936k, while the more volatile multi-family segment recorded a larger gain of 8.6 percent to 378k.

Permits showed a similar narrative to starts, rising 5 percent sequentially after falling 2.4 percent the prior month. Single-family permits continued their six-month advancing streak, rising 3.2 percent. Multifamily permits also rose 8.2 percent, reversing September’s fall of 7.3 percent.

Region wise, starts generally turned positive, with just the Northeast posting a marked fall of 21.9 percent. The West, Midwest and South recorded rise of 17.6 percent, 8.7 percent and 0.7 percent respectively.

“The good news is that U.S. home builder sentiment remains elevated and builders' optimism for sales in the next six months has risen to the highest level since May last year. Elevated sentiment, along with a rise in permits, particularly the six-month consecutive rise in single family permits, bodes well for future construction activity. As such, residential investment, which has subtracted from economic activity in recent history, but turned positive in Q3, is expected to continue to do so over the next year”, said TD Economics in a research report.