Sept. housing starts rose 6.3% to an annualized 1.017 mil, slightly beating expectations. Starts are up 17.8% from a year ago. Much of the activity has been centered in multifamily construction, which is up 30.3% annually. Overall permits rose to 1.018 mil, shy of forecasts and mostly in multifamily. Single-family permits dipped 0.5%.
A gauge of home-builder sentiment fell in October, the latest in a string of mixed signals for the U.S. housing recovery.
An index of builder confidence in the market for new single-family homes declined by five points to a seasonally adjusted level of 54 in October, the National Association of Home Builders said Thursday. A reading over 50 means most builders generally see positive conditions.
The index jumped in September to 59, its highest level since November 2005. Economists surveyed by The Wall Street Journal expected the index would remain at that level in October.
October marked the index’s first decline since May, though it remained above the 50-point threshold for a fourth consecutive month. “Historically low mortgage interest rates, steady job gains and significant pent-up demand all point to continued growth of the housing market,” said David Crowe, the trade group’s chief economist.
U.S. home builders this month grew less confident about current sales conditions, expected future sales and traffic from prospective buyers. The index fell from September in all four regions of the country.
After a streak of strong growth in 2012 and the first half of 2013, the U.S. housing sector has hit turbulence over the last year, in part due to a jump last summer in mortgage rates. The Federal Reserve, in a policy statement last month, reiterated its concern about the “slow” housing recovery.
Sales of previously owned homes were down 5.3% in August from a year earlier, according to the National Association of Realtors. Although on a brighter note, data just released is showing sales of U.S. existing homes in September rose to a one-year high. Sales of newly built homes, which make up roughly 10% of the market, were up 2% in the first eight months of 2014 compared with the same period a year earlier, the Commerce Department said.
Growth in construction of multifamily housing, such as apartment buildings, has outpaced construction of traditional single-family homes. Overall housing starts rose 8.6% in the first eight months of the year compared with 2013. But new construction on single-family homes rose just 3.1%, and building permits for single-family homes were flat from a year earlier, according to Commerce Department data.
Miami-based builder Lennar Corp. last month reported a boost in quarterly profits, aided by the sale of two apartment properties. “These sales demonstrate the earnings potential of a maturing business, “Chief Executive Stuart Miller told analysts.
Still, Barclays analysts this week lowered their forecast for starts in 2015, “as we doubt that the dysfunction in the housing market will be resolved quickly enough to allow more than a 10% increase in sales volume next year, they wrote in a report.