Dive Brief:
- Housing starts rose 6.5% between August and September to an annualized rate of 1.21 million, the Commerce Department reported Tuesday. Single-family starts inched up 0.3%, while multifamily starts soared 18.3%.
- The September rate — the second-highest level in eight years — surpassed analyst expectations, as economists surveyed by Bloomberg had predicted starts would come in between 1.09 million and 1.2 million.
- Building permits, however, fell 5.0% overall — a sign of a likely slowdown in residential starts in the coming months. Single-family permits dropped 0.3%, while multifamily permits plummeted 12.1%.
Dive Insight:
September's rise in new residential construction followed a 3.0% dip between July and August. Economists attribute the recent bump to a strengthening job market and wage gains that are allowing potential buyers to save up for down payments and spend more on new homes.
The Commerce Department's report coincides with results released Monday of the NAHB/Wells Fargo Housing Market Index, which found builder confidence rose 3 points to 64 — reaching its highest level since October 2005.
Despite the surge in September rental sector starts, the dip in multifamily building permits offers further evidence of predictions the hot rental market would start to soon cool down. That means good news for single-family builders anxiously awaiting the arrival of first-time buyers, but bad news for multifamily developers hoping to keep the sector's streak alive.
Data for September's existing home sales, released Thursday, and new home sales, released Sept. 26, will provide a better picture of the current state of the housing market.
