Housing starts climbed to annual rate of 1.02 million in September, an increase of 6.3% compared to the 957,000 pace that was forecast in August, according to figures released today by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Most of that growth, however, came in the form of multifamily housing. Construction of multifamily projects, such as condominiums and townhouses, increased 16.7% to an annual rate of about 371,000. Meanwhile, starts of single-family homes rose to an annual rate of 646,000 – only a 1.1% increase from the annual rate of 639,000 forecast in August.
Permits for new homes increased to an annual rate of 1.02 million, a 1.5% increase compared to August.
Housing completions in September were at a seasonally adjusted annual rate of 999,000, an increase of 8.6% above the revised August estimate of 920,000 and 31.3% above the September 2013 rate of 761,000.
Single-family housing completions in September were at a rate of 624,000, which is just 1% above the revised August rate of 618,000. The September rate for units in buildings with five units or more was 368,000.
By region, construction of new homes increased 13.9% in the West, 5.3% in the Northeast, 4.2% in the South and 3.5% in the Midwest.
Meanwhile, builder confidence in the market for newly built single-family homes in October fell to a score of 54 on the National Association of Home Builders/Wells Fargo Housing Market Index. The drop came after the index score had increased for four consecutive months, reaching a score of 59 in August.
Some economists are forecasting that starts of new single-family homes will soon increase, due to the fact that certain fixed mortgage rates recently dipped below 4%, as well as the fact that the job market has improved in recent months.
‘An improving job market and lower energy costs are going to offset a lot of what's happening,’ Joseph LaVorgna, chief U.S. economist of Deutsche Bank Securities Inc. in New York, told Bloomberg News in a report. ‘Consumers' take-home pay is going up, and they're paying a lot less at the pump.’
However, slow household formation, elevated student debt levels, low inventories of new homes resulting in higher prices, and tighter lending standards will likely continue to hold the new, single-family housing market back.