KEY MARKET INDICATORS as of Nov 17, 2017
October Housing Starts
Housing starts increased almost 14% m/m to a seasonally adjusted annual rate of 1.29 million units in October. Compared to 12 months ago, housing starts were down 2% because of particularly strong performance a year ago. The strong m/m increase in housing starts is largely due to a spike in the multi-family segment. Single-family housing starts increased by 5% m/m to 877,000 units, while multi-family housing starts increased by 37% to 413,000 units. Year-to-date, housing starts have averaged 1.2 million units, which is an increase of 2% from a year ago. The slow growth in housing starts in a market with strong demand is one reason that home prices have continued to advance.
The slow growth in total housing starts also reflects different conditions in the apartment rental market and in the owner-occupied (or for sale) market. The apartment market, which dominates multi-family housing starts, recovered earlier in the housing cycle, but has already peaked. Multi-family housing starts are down 10% y/y through October. This has been a drag on the overall housing starts this year.
The story in the single-family housing market is different. It is still recovering, and is up 8% y/y through October. But the pace of recovery remains disappointing compared to normal levels in the past. Eight years after reaching a trough in construction activity, single-family housing starts remain about 300,000 units below its normal level.