Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Housing Starts Increased 3.8% in October
Posted Under: Data Watch • Home Starts • Housing
Supporting Image for Blog Post

 

Implications:  Following a dip in September, housing starts returned to growth in October.  The key driver of the 2019 recovery in residential construction continues to be single-family starts, which posted a fifth consecutive month of growth in October.  More broadly, single-family starts have been on a general upward trend since bottoming in February and are in spitting distance of new highs.  Meanwhile, multi-family starts have been range bound since 2015 when the upward trend ended.  On average, each single-family home contributes to GDP about twice the amount of a multi-family unit, so a continued shift back towards single-family construction will be a boon for economic growth.  And it looks like even more single-family construction is on the horizon, with permits for these units rising in October for the sixth consecutive month to a new post-recession high.   This, along with gains in multi-family permits, pushed overall permits in October to a post-recession high as well.  It looks like developers are becoming more optimistic about their prospects following an all-around tepid year for housing in 2018.  And it's not hard to see why, with sustained increases in the strength of fundamentals for potential buyers.  Mortgage rates have dropped roughly 100 basis points since the peak late last year, and wages are now growing near the fastest pace in a decade, boosting affordability.  Our outlook on housing hasn't changed: we anticipate a rising trend in home building in the next few years.  Based on fundamentals – population growth and scrappage – the US needs about 1.5 million new housing units per year but hasn't built at that pace since 2006.  In other recent housing news, the NAHB index, which measures homebuilder sentiment, fell to 70 in November from 71 in October, remaining elevated. This represents a significant and consistent rebound in optimism following the drop in the index at the end of 2018.

Click here  for PDF version
                                              

Posted on Tuesday, November 19, 2019 @ 11:08 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.