Privately-owned housing starts in the U.S. surged by 15.% to an annualized pace of 872,000 units in September following the upwardly revised 758,000 reading seen in the previous month. The level of starts in September represents the highest since July 2008 and soundly beat market expectations going into the report for a more modest increase to an annualized 770,000 in the month.
The improved pace of the new home construction in September was driven by sharp increases in both single-unit and multiple-unit housing starts. Single-unit starts jumped 11.0% in the month to build on the upwardly revised 7.3% gain seen in August and push the component to its highest level in four-years at 603,000 annualized units.
Multiple-unit starts rose by a stronger 25.1% in September to more than reverse the modest declines seen over the previous two months, with the 269,000 annualized units started in the month representing the highest level since September 2008. Regionally, increases in new home construction were seen in the West (+20.1%), South (+19.9%) and Midwest (+6.7%), while a decline in the Northeast (-5.1%), the smallest region, provided some offset.
Building permits jumped 11.6% to an annualized pace of 894,000 units in September, handily beating market expectations for a modest increase to 810,000. The level of permits in September represented the highest since July 2008 and reflected solid gains in both permits for single-unit structures (+6.7%) and multiples (+20.3%).
"With today’s reported sharp increase in September," according to experts at RBC Economics, "starts averaged 786,000 annualized units in Q3, which is a 6.8% increase from the previous quarter and the highest level in four years.
"The rising optimism within the new build sector, as indicated by yesterday’s reported sixth consecutive monthly increase in homebuilders’ confidence to its highest level since 2006, as well as the elevated level of building permits," the experts conclude, "suggest that the housing market should maintain this momentum over the coming months and we continue to expect overall housing market conditions to improve gradually over the forecast horizon."
