Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Housing starts fell 1.1.7% in October
Supporting Image for Blog Post

Implications:  The headline large drop in housing starts in October is highly misleading.  Almost all the decline was due to multi-family starts, which fell a whopping 43.5%, the largest percentage drop on record for any month going back to 1959.  It's important to remember that multi-family starts are extremely volatile from month to month.  Despite the large drop in October, the 12-month moving average for multi-family starts is still in a rising trend.  Meanwhile the demand for multi-unit dwellings is increasing due to ongoing foreclosures and the rise in rental occupancy.  As a result, we anticipate a very large rebound in multi-unit construction over the next couple of months.  It is important to recognize that starts are not falling due to excess inventories.  Although excess housing inventories remain, they are dropping rapidly and will continue to decline even in the face of a substantial recovery in home building. True, many former "homeowners" (we use that term loosely after an era of zero down payments) are becoming renters, but rental properties require construction too.  When you hear stories about a "wave of foreclosures" lifting inventories, remember that when someone leaves their home to rent somewhere else that overall housing inventories do not change.  Meanwhile, single-unit starts have been essentially unchanged over the past four months, averaging 434,000 at an annual rate.  Single-family starts fell 1.1% in October to a 436,000 rate.  Single-family completions have been running higher than that and increased 2.7% in October, as home builders focus on completing the projects they've already begun.

Click here to view the entire report.
Posted on Wednesday, November 17, 2010 @ 9:43 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.