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Total
housing starts advanced
in September, to a seasonally adjusted and annualized rate (SAAR) of 1.017
million units. That level was 60,000 more (6.3 percent) than August’s 957,000
units. Nearly nine-tenths of the increase in total starts occurred in the multi-family
component (53,000 units or 16.7 percent); single-family starts rose by 7,000
units (1.1 percent).
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Unsurprisingly,
the year-over-year percentage change in total starts also rose in September, to
18.9 percent. Single-family starts were 11.8 percent above their year-earlier
level; the more volatile multi-family component jumped to 32.5 percent above
its September 2013 level.
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Completions
increased by 79,000 units (8.6 percent) in September, to 999,000 units SAAR. Over
nine-tenths of the increase occurred in the multi-family component (73,000
units or 24.2 percent), as the single-family component increased by just 6,000
units (1.0 percent). Total completions were 33.1 percent above their
year-earlier level.
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Total
permits increased by 15,000 units (1.5 percent), to 1.018 million SAAR in September.
The increase occurred entirely in the multi-family component (+18,000 units or 4.8
percent). Single-family permits inched lower (-3,000 units or 0.5 percent). Total
permits were 7.8 percent above year-earlier levels; single- and multi-family
components were, respectively, 6.3 and 10.1 percent higher.
It
appears the slide in the rate of annual growth in total permits seen since late
2012 has come to an end, but it is still too early to tell whether the trend is
poised to turn back up. That may be the case, although the latest National
Association of Home Builders/Wells Fargo Housing Market
Index (HMI) fell five points in October (to 54), ending a four-month run of
gains. An index value above 50 means more builders feel the market is good than
feel it is poor.
“After
the HMI posted a nine-year high in September, it’s not surprising to see the
number drop in October,” said NAHB Chief Economist David Crowe. “However,
historically low mortgage interest rates, steady job gains, and significant
pent up demand all point to continued growth of the housing market.”
Based
on the observation that not-seasonally adjusted completions exceeded permits in
September, Global Economic Intersection’s Steven Hansen believes potential for
future growth in the housing sector is limited. Also, “whenever permits rate of growth is lower than completions,”
Hansen
wrote, “this industry is decelerating” (emphasis added).
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The foregoing comments represent the
general economic views and analysis of Delphi
Advisors, and are provided solely for the purpose of information, instruction
and discourse. They do not constitute a solicitation or recommendation
regarding any investment.
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