Implications: Home building soared in September, not only crushing consensus expectations, but easily beating every single economic forecast for both housing starts and permits for future construction. Housing starts are up 34.8% from a year ago and builders are now starting homes at the fastest pace since July 2008. Even more impressive, the gains were not lopsided toward the volatile multi-family sector. The 11% growth in single-family starts accounted for about half of the increase in total starts. As the charts to the right show, both single-family and multi-family starts and permits are trending higher. The total number of homes under construction (started, but not yet finished) are up 21% from a year ago and increased for the 13th straight month, the first time this has happened since back during the building boom in 2003-2004. Based on population growth and "scrappage," housing starts will eventually rise to about 1.5 million units per year (probably by 2015-16), which means the recovery in home building is still young. That may seem like a big leap over the next few years, but a gain of 20% per year for the next three years gets us up to that level. And that pace of increase is slower than the gains over the past twelve months. Don't expect a straight line recovery, there will be zigs and zags along the way, but the overall trend will continue higher. In other recent housing news, the NAHB index, a measure of builder confidence, hit 41 in October, the highest level since mid-2006. For a little more on the housing recovery, please see an interview from a month ago on Bloomberg TV here.
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Posted on Wednesday, October 17, 2012 @ 9:14 AM
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