Housing starts, a measure of new home construction registered at breaking ground on a new home, came in at a seasonally adjusted annual rate of 1.31 million in October, a 3.8% increase from the previous month but slightly lower than expectations. September’s new home construction was revised up to 1.27 million, which was down 8% from August, but the third quarter overall posted the strongest pace since the start of 2018.
Regionally, single and multifamily construction buoyed the strong performance everywhere but the Northeast which saw double-digit losses. All other regions registered modest gains, even though many faced record cold temperatures and precipitation levels; the increases showed up mostly in multifamily over single-family homes.
Building permits came in at a 1.46 million seasonally adjusted annual rate, beating expectations and soaring to a 12-year high. Supporting the climb were single-family permits, which is welcome news especially if the homes are entry-level. Builder sentiment remains high with all three components of the index sitting comfortably in positive territory for the fourth month in a row.
The housing market finished the third quarter stronger than it has all year even though September figures were weak. The fourth quarter is off to a strong start. Mortgage rates will remain low even as the Federal Reserve is pausing on rate cuts waiting to see how the three, one-quarter-point cuts this year will play out.
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