Implications: Home building soared 15% in September, bouncing back after the unusually harsh weather we saw in August, coming in at the highest level since April 2010. However, most of the increase was due to a 51.3% spike in multi-family units, which are volatile from month to month. The general trend in multi-family units should continue to go higher given the movement away from owner-occupancy and toward rental occupancy. To help show this, 5 or more unit completions were up 43.4% in September. Another positive from today's report was that although single-family homes under construction hit a new record low, total homes under construction increased for the second time in three months. This is only the second time homes under construction have increased since 2006! What this shows is that the bottoming process is happening and home building should trend higher over the next couple of years. After a large rise in building permits last month, permits fell 5% in September, but remain up 5.7% from a year ago. Based on population growth and "scrappage" rates, home building must increase substantially over the next several years to avoid eventually running into shortages.
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Posted on Wednesday, October 19, 2011 @ 10:04 AM
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