Housing starts as reported by the US Census Bureau and the Department of Housing and Urban Development were effectively unchanged in October, but the total number conceals opposite activity in the single-family and multifamily rental sectors. Single-family housing starts were up 3.9 percent while construction in buildings with 2 or more units fell 8.3%. The drop in multifamily construction from the September level was an adjustment to an exceptionally large number in September. On a three-month moving average level, multifamily starts have been increasing for five months.
Housing permits were up for both single- and multifamily construction. Overall permits rose 10.9 percent with single-family up 5.1 percent and multifamily (2+) up 24 percent. Total permits were 653,000 on a seasonally-adjusted annual basis, which is the highest level since the home buyer tax credit expired in spring 2010.
Housing completions were down but the fall was entirely within the multifamily sector. Single-family completions were up 7.1 percent, further supporting the conclusion that builders are seeing more activity in the for-sale market.
The combined message from the construction activity as well as other recent positive moves in the NAHB/Wells Fargo Housing Market Index and the NAHB/First American Improving Markets Index indicates a continuing albeit slow housing recovery. The October reports support the NAHB forecast for a very slowly improving housing market in 2012.