Mixed Residential Construction Results, Another Lackluster Month

October was another mixed but largely mediocre month for residential construction.  Permits were lower both on a monthly and an annual basis, while housing starts improved marginally, but only for the month. Completions also lagged earlier numbers.

The Census Bureau and the Department of Housing and Urban Development said that permits were issued at a seasonally adjusted annual rate of 1,263,000 units, down 0.6 percent from the September rate of 1,270,000.  The September number was revised up from the original estimate of 1,224,000.  Permits in October were down 6.0 percent from the October 2017 rate of 1,343,000 units.

The permitting number did come in higher than predictions of analysts polled by Econoday.  They had estimated in the range of 1,224,000 to 1,285,000 with a consensus of 1,260,000 units.

Single family starts were at an estimated rate of 849.000, also down 0.6 percent both from the October estimate (which was revised from 851,000 to 854,000) and from the October 2017 rate.  Permits for construction of units in buildings with 5 or more were unchanged at 376,000 units and 17.2 percent lower than the same month in 2017.

On an unadjusted basis there were 112,500 permits issued in October compared to 99,400 in September.  There were 74,200 single family permits issued, up from 65,000 the previous month. For the year through October there have been 1,117,400 residential construction permits issued compared to 1,075,900 for the first 10 months of 2017.  Single-family permits total 738,000 thus far in 2018 against 698,900 for year-to-date (YTD) 2017.

Construction was started on 1,228,000 units of housing in October, a 1.5 percent improvement over September's seasonally adjusted annual rate of 1,210,000.   The latter is a revision from the 1,201,000 units originally reported.  Despite the improvement, starts are still down 2.9 percent from October 2017.

Results were in the mid-range of analysts' expectation which ran from 1,180,000 to 1,269,000.  The consensus was 1,260,000 construction starts.

Single family houses were started at a seasonally adjusted annual rate of 865,000 units, down 1.8 percent from the October 2017 estimate of 881,000 units.  September starts were originally estimated at 871,000 units.  The seasonally adjusted rate for multifamily starts roses by 20,000 units month-over-month to 343,000, an increase of 6.2 percent.  Multi-family starts are lagging those in October 2017 by 4.5 percent.

On a non-adjusted basis there were 107,300 units started in October compared to 106,900 in September.  The respective numbers for single family starts were 74,600 and 75,300.  For the YTD there have been 1,081,500 compared to 1,023,700 for the first 10 months of 2017 Single family starts YTD in 2018 are 764,600 up from 724,700 last year.

Completions declined by 3.3 percent from September and 6.5 percent on an annual basis.  There were 1,111,000 units, annualized, brought on line for the month compared to 1,149,000 in September.  Single family units were completed at an annual rate of 832,000 units, down 1.2 percent from the 842,000 units reported for September.  The original estimates for September completions were 1,162,000 and 844,000 for the total and single-family units respectively.

On a non-adjusted basis there were 99,900 housing units completed in October, down from 100,700 in September.  Single family completions rose from 73,300 to 76,300.  For the YTD through October there have been 992,900 residential units completed, 699700 of them single-family.  The numbers for the same period in 2017 were 944,400 and 644,800.

At the end of the reporting period there were 1,137,000 residential units under construction, 527,000 of which were for single family houses. In addition, there were 170,000 permits outstanding, 93,000 of which were for single family houses for which construction had not been started.

Permits in the Northeast were issued at a seasonally adjusted rate 21.1 percent higher than in September but down 5.0 percent year-over-year. Starts dropped sharply from September, down 34.1 percent and are running 40.0 percent below the October 2017 pace. Completions dropped 28.0 percent and 44.6 percent for the two reporting periods.

In the Midwest the rate of permitting was up 9.4 percent for the month but 5.1 percent lower than in October 2017.  Housing starts rose 32.9 percent month-over-month and are 5.0 percent higher on an annual basis. Housing was completed at rates 1.7 percent higher than in September and 22.3 percent higher than a year earlier.

The South saw a 2.4 percent decline in permitting in October but 0.2 percent more than a year earlier.  Starts were up 4.7 percent for the month but down 3.4 percent from the prior October. Completions were down 3.7 percent and 13.4 percent for the month and year.

There were 7.9 percent fewer permits authorized in the West than the previous month and 17.2 percent fewer than in October of last year. Starts slowed by 4.6 percent compared to September but were up 10.6 percent year-over-year.  The rate of completions rose by 3.3 percent and 13.2 percent for the two earlier periods.