Steel Markets

Single-Family Housing Starts Soften in October

November 19, 2018

Housing starts rebounded in October due to multi-family construction, while single-family starts continued to decline. Overall housing starts were 1.5 percent higher from September to October for a seasonally adjusted annual rate of 1,228,000, according to Commerce data. Multi-family starts were up 6.2 percent, but single-family starts declined 1.8 percent.

Starts climbed 32.9 percent in the Midwest, but plunged 34.1 percent in the Northeast. The South recorded a modest gain of 4.7 percent from multi-family starts, while the West dropped 4.6 percent.

Permit authorizations fell for both single- and multi-family housing in October, dropping 0.6 percent sequentially for single-family homes and 5.0 percent for residential buildings of two to four units. Overall, permits declined 0.6 percent to a seasonally adjusted annual rate of 1,263,000.

Single-family permit authorizations declined or were weak in all regions except the Northeast, which saw authorizations jump 10.5 percent. Northeast permits overall jumped 21 percent followed by a climb of 9.4 percent in the Midwest and declines in the South and West.

From January through October, starts were up 5.6 percent, a modest amount given the strong economy and low unemployment rate. Affordability, labor shortages and rising mortgage rates are subduing the market, say economists.

“Single-family starts were strong at the beginning of the year, but weakened this summer and have remained soft,” said NAHB Chief Economist Robert Dietz. “Despite this softness, 2018 construction volume is set to be the best since the downturn. A growing economy and positive demographic tailwinds are supporting housing demand as interest rates rise. However, policymakers should take note of the November decline in builder confidence as a sign that housing affordability conditions will weigh on the housing market going forward.”