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U.S. housing starts rise sequentially in October, likely to see modest gains in remainder of 2018

Housing starts in the U.S. rose in October. On a sequential basis, housing starts rose 1.5 percent to 1.23 million from an upwardly revised 1.21 million in September. The rise was mainly seen in the volatile multi-family segment, which rose 10.3 percent to 363k units. Single-family starts fell 1.8 percent to 865k units. The market expectations were for a rise of 1.8 percent.

On the contrary, building permits dropped 0.6 percent to 1.26 million in October. Both single and multi-family permits dropped in the month. Region wise, starts rose nearly 33 percent in the Midwest and 4.7 percent in the South, but dropped 34.1 percent in the Northeast and 4.6 percent in the West.

In the past few quarters, the contribution of the housing industry to overall economic output has been comparatively muted. Rebuilding activity after the destruction of homes by Hurricanes Florence and Michael, however, are likely to buoy starts in the near-term, particularly those in the single family segment, noted TD Economics in a research report.

In spite of the near term fillip, homebuilding activity faces considerable headwinds. These including increased affordability concerns as both interest rates and home prices have increased in recent months.

“These, in addition to already present supply constraints (labor and lot shortages), are likely to limit the upside potential for sustained increases in starts. Nevertheless, we do expect starts to eke out modest gains for the remainder of the year on the back of rising wages and steady demand”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 20.2569. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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